» 


A   TREATISE 


ON  THE 


LAW  OF  RECEIVERS. 


BY 

JAMES  L.  HIGH. 


SECOND  EDITION. 


CHICAGO: 

CALLAGHAN  AND  COMPANY, 

1886. 


r 


I9S6 


Entered  according  to  &ct  of  Congress,  in  the  year  1876,  by 

JAMES    L.    HIGH, 
In  the  office  of  the  Librarian  of  Congress,  at  Washington. 


Entered  according  to  Act  of  Congress,  in  the  year  1886,  by 

JAMES    L.    HIGH, 
In  the  office  of  the  Librarian  of  Congress,  at  Washington. 


DAVID  ATWOOD, 

Printer  and  Stereotypes, 
MADISON,  wis. 


PREFACE. 




The  growth  of  the  law  of  receivers  during  the  ten  years 
which  have  elapsed  since  the  publication  of  the  first  edition 
of  this  work  has  been  xevy  marked.  Six  hundred  new 
cases,  which  have  been  reported  in  the  English,  Irish  and 
American  reports  during  that  time,  are  embodied  in  this 
edition.  The  principal  additions  have  been  to  the  chapters 
upon  Actions  by  and  against  Receivers,  Receivers  Over 
Corporations,  Railways,  Real  Property  and  Mortgages, 
especially  to  the  chapter  upon  Railways.  The  law  of 
receivers  over  railways  has  been  largely  tin.'  growth  of  the 
last  ten  years,  and  it  can  not  be  said  to  have  wholly 
emerged  from  its  formative  period,  and  considerable  mod- 
ifications of  existing  doctrines  may  yet  be  expected.  This 
chapter  has  been  entirely  rewritten  and  much  enlarged, 
presenting  several  topics  which  are  wholly  new,  includ- 
ing Preferred  Indebtedness  of  Railway  Receivers,  Actions 
against  the  Receiver  and  Receivers'  Certificates.  Consider- 
able freedom  has  beeji  indulged  in  the  criticism  of  doubtful 
authorities,  but  the  author  has  scrupulously  endeavored  to 
present  the  existing  state  of  the  law  upon  the  topics  under 

discussion. 

J.  L.  IL 
Chicago,  March,  1886. 


CONTENTS. 


CHAPTER  I. 

Section 

Of  the  General  Features  of  the  Jurisdiction 1 

CHAPTER  II. 

Of  the  Courts  Exercising  the  Jurisdiction 40 

I. —  What  Courts  May  Appoint  Receivers 40 

II. — Relative  Powers  of  State  and  Federal  Courts    ....  50 

CHAPTER  III. 

Of  the  Selection  and  Eligibility  of  the  Receiver  ....  63 

CHAPTER  IV. 

Of  the  Practice  .     .    ~t 82 

I. —  General  Rules  of  Practice 82 

II. —  Time  of  Appointment 103 

IH. —  Notice  of  the  Application Ill 

CHAPTER  V. 

Of  the  Receiver's  Bond  and  Liability  Thereon 118 

I— Of  the  Bond lis 

II. —  Liability  of  Sureties 127 

CHAPTER  VI. 

Of  the  Receiver's  Possession 134 

I. —  Nature  of  Receiver's  Possession 134 

II. —  Interference  with  Receiver's  Possession 163 

CHAPTER  VII. 

Of  the  Receiver's  Functions 175 

I. —  General  Nature  of  his  Functions 175 

II. —  Sales  by  Receivers 191 


VI  CONTENTS. 

CHAPTER  VIII. 

Section 

Of  Actions  by  and  against  Receivers, 300 

I. —  Principles  Governing  Suits  by  Receivers 200 

II. —  Pleadings  and  Proofs  in  Actions  by  Receivers        .     .     .  231 

III. —  Suits  by  Receivers  in  Foreign  Courts 239 

rv. —  Defenses  to  Actions  by  Receivers        245 

V. —  Actions  against  Receivers 254 

CHAPTER  IX. 

Of  the  Receiver's  Liabilities 209 

CHAPTER  X. 

Of  Receivers  Over  Corporations 287 

I. —  Principles  Governing  the  Jurisdiction 287 

II. —  Functions,  Duties  and  Rights  of  Action  of  the  Receiver  313 

III. —  Receivers  of  Insolvent  Corporations 343 

IV. — Receivers  of  National  Banks 358 

CHAPTER  XI. 

Of  Receivers  Over  Railways 365 

I. —  Principles  Governing  the  Jurisdiction 365 

II. —  Receivers  in  Aid  of  Mortgagees  and  Bondholders        .     .  376 

III. —  Functions  and  Duties  of  the  Receiver 390 

IV.— Preferred  Debts 394  a 

V. —  Actions  against  the  Receiver     .           395 

VI. —  Receivers' Certificates 398  c 

CHAPTER  XII. 

Of  Receivers  in  Aid  of  Judgment  Creditors 399 

I. —  Principles  on  Which  the  Relief  is  Granted 399 

II.— Of  the  Receiver's  Title 440 

III. —  Of  the  Receiver's  Functions  and  Rights  of  Action      .     .  453 

CHAPTER  XIII. 

Of  Receivers  Over  Partnerships 472 

I. — Principles  on  Which  the  Relief  is  Granted 472 

II. — Receiver  Upon  Dissolution  of  the  Firm 509 

III.—  Exclusion  from  Firm  as  Ground  for  Receiver    ....  522 

IV. —  Receiver  Upon  Death  of  Partner 530 

V. —  Functions  and  Duties  of  the  Receiver 538 


CONTENTS.  VI L 

CHAPTER  XIV. 

Section 

Of  Receivers  Over  Real  Property 553 

I. — Principles  Upon  Which  the  Relief  is  Granted  ....  553 

II. —  Receivers  as  Between  Tenants  in  Common 603 

III.  —  Receivers  as  Between  Vendors  and  Purchasers       .     .     .  609 

IV. —  Functions  of  the  Receiver 61 S 

CHAPTER  XV. 

Of  Receivers  in  Cases  of  Mortgages 639 

I. —  Principles  Governing  the  Relief 639 

II. — Inadequacy  of  Security  and  Insolvency  of  Mortgagor     .  666 

III. —  Receivers  as  Between  Different  Mortgagees       ....  679 

CHAPTER  XVI. 

Of  Receivers  in  Cases  of  Trusts 692 

I. —  Principles  Governing  the  Relief 692 

II. — Receivers  Over  Executors  and  Administrators  ....  706 

III. —  Receivers  Over  Estates  of  Infants 725 

IV. —  Receivers  Over  Estates  of  Lunatics 733 

CHAPTER  XVII. 

Of  Receivers  in  Connection  with  Injunctions 737 

I. — The  Remedies  Compared 737 

II. —  The  Remedies  as  Applied  to  Corporations 749 

III.—  Creditors'  Suits 755 

rV.—  Partnerships 760 

V.— Real  Property 772 

CHAPTER  XVIII. 

Of  the  Receiver's  Compensation 781 

CHAPTER  XIX. 

Of  tiie  Receiver's  Accounts 797 

CHAPTER  XX. 

Of  the  Removal  and  Discharge  of  Receivers 820 

I. — Removal  for  Cause 820 

II.— Final  Discharge 832 


TABLE  OF  CASES  CITED. 


THE  REFERENCES  ARE  TO  THE  PAGES. 


Abbott  v.  Baltimore  &  Rappahan- 
nock Steam  Packet  Co.,  650,  652 

Abbott  v.  Stratten,  80,  397 

Ackland  v.  Gravener,  542,  543 

Adair  v.  Wright,  89,  554,  556 

Adams  v.  Haskett,  150,  447,  474 

Adams  v.  Woods,  179,  180,  447,  475, 
662,  664,  665,  673 

Addison  v.  Lewis,  342 

Adee  v.  Bigler,  376 

Adler  v.  Milwaukee  Patent  Brick 
Manufacturing  Co.,  228,  236~ 

Agra    &    Masterman's     Bank    v. 
Barry,  80,  505,.  581,  582 

Ainsley,  In  re,  179,  180 

Akers  v.  Veal,  662 

Akrill  v.  Selden.  619 

Albany  City  Bank    v.   Schermer- 
horn,  142,  143,  404,  405 

Albright  v.  Albright,  590 

Aldcn  v.  Boston,  Hartford  &  Erie 
R.  Co.,  47,  53,  304 

Alexander  v.  Relfe,  177,  249,  250 

Alford  v.  Berkele,  95 

Allen  v.  Chadburn,  32 

Allen  v.  D.  &  W.  R.  Co.,  313,  687 

Allen  v.  Harris,  38 

Allen  v.  Hawley,  435,  436,  438 

Allison  v.  Weller,  418 

Allyn  v.  Boorman,  474 

Alven  v.  Bond,  156,  158 

American  Bank  v.  Cooper,  81,  175 


Ames   v.   Trustees  of   Birkenhead 

Docks,  114,  119 
Anderson  v.  Anderson,  156 
Anderson  v.  Guichard,  603,  604 
Anderson  v.  Powell,  449 
Anderson  v.  Reed,  684 
Anderson  v.  Treadwell,  406 
Andrews  v.  Betts,  21 
Andrews  v.  Smith,  323 
Angel  v.  Smith,  109,  110,  114,  115. 

391 
Angell  v.  Silsbury,  249,  420 
Anglo-Italian  Bank  v.  Davies,  25 
Anonymous,  60,  61,  102,  111,  134, 

139,  214,  223,  481,  497,  531,  600, 

610,  695 
Armstrong  v.  Sanford,  684 
Armstrong  v.  Southwell,  532 
Arnold  v.  Suffolk  Bank,  211 
Artisans  Bank  v.  Treadwell,  87,  112 
Asheville  Division  No.  15  v.  Aston, 

251 
Astor  v.  Turner,  545,  563,  571 
Atchison  v.  Davidson,  249,  260,  282 
Atkins  v.  Petersburg  R.  Co.,  336, 

337 
Atkinson  v.  Henshaw,  41 
Atkinson  v.  Smith,  102 
Atlas  Bank  v.  Nahant  Bank,  235 
Attorney-General  v.  Bank   of  Co- 
lumbia, 67,  78,  279,  285,  286 
Attorney-General    v.     Continental 

Life  Insurance  Co.,  155,  220,  282, 

475,  648,  656,  671 


TABLE    OF    CASES    CITED. 


[references 

Attorney-General  v.  Day,  14 

Attorney-General  v.  Gee,  66 

Attorney-General  r.  Guardian  Mut- 
ual Life  Insurance  Co.,  165,  256, 
258,  277 

Attorney-General  v.  Life  &  Fire 
Insurance  Co.,  271 

Attorney-General  v.  Mayor  of  Gal- 
way,  79 

Attorney-General  v.  North  America 
Life  Insurance  Co.,  277,  648,  670 

Attorney-General  v.  St.  Cross  Hos- 
pital, 116,  623 

Attorney-General  v.  Vigor,  148 

Attrill  v.  Rockaway  Beach  Im- 
provement Co.,  681 

Augusta  lee  Manufacturing  Co.  v. 
Gray,  75 

Austin  v.  Figueira,  375 

Averall  v.  Wade,  102 

Avery  v.  Blees  Manufacturing  Co., 
280 


B. 


Bagby  v.  A.,  M.  &  O.  R.  Co.,  193, 

194 
Baggs  v.  Baggs,  510 
Bailey  v.  Belmont,  151 
Bailey  v.  Lane,  384 
Bailey  v.  O'Mahoney,  35,  151 
Bailie  v.  Bailie,  97 
Bainbrigge  v.  Baddeley,  480,  482, 

484 
Bainbrigge  v.  Blair,  594,  692 
Baird  r.  Turnpike  Co.,  28 
Baker  v.  Administrator  of  Backus, 

2,  13,  18,  67,  84,  85,  228,  230,  231, 

232 
Baker  v.  Bartol,  100 
Baker  v.  Cooper,  171,  174,  175 
Baldwin  v.  Eazler,  648,  653 
Balfe  v.  Blake,  535 
Ball  v.  Oliver,  41 
Bangs  v.  Duckinfield,  268 
Bangs  v.  Gray,  264,  268 


ARE  TO  PAGES.] 

Bangs  v.  Mcintosh,   185,   228,   230, 

267 
Bank  v.  Duncan,  106 
Bank  v.  Kennedy,  290.  291 
Bank  v.  McLeod,  193,  194 
Bank  of  Bethel  v.  Pahquioque  Bank, 

289,  291 
Bank  of  Monroe  v.  Schermerhorn, 

72,  84,  85,  365,  366,  367,  633,  683, 

685 
Bank  of  Montreal  v.  C,  C.  &  W. 

R.  Co.,  324.  357.  35s,  ^\>,  360 
Bank  of  Montreal  v.   Thayer,  858, 

360 
Bank  of  Niagara,  In  re,  674 
Bank  of  North  America  v.  Wheeler, 

167 
Bank  of  Ogdensburgh  v.  Arnold, 

545.  570 
Bank  of  Washington  v.  Creditors, 

102 
Bank  of  Wooster  v.  Spencer,  398 
Banks  v.  Potter,  98 
Barclay  v.  Quicksilver  Mining  Co., 

243,  245 
Barker  v.  Clark,  606 
Barker  v.  Dayton,  182,  400 
Barkley  v.  Lord  Reay,  587 
Barlow  v.  Gains,  89,  556 
Barnes  v.  Jones,  77,  438,  461 
Barnes  v.  Newcomb,  284 
Barrett  v.  Mitchell,  560 
Barron  v.  Mullin,  161 
Barry  v.  Briggs,  29 
Barry  v.  Kennedy,  33 
Bartlett  v.  Wilbur,  190 
Barton  v.  Barbour,  205,  207,  337, 

347 
Bateman  v.  Superior  Court,  500 
Bates  v.  Brothers,  418 
Battaile  r.  Fisher,  221,  673,  676.  677 
Battersby  v.  Homan,  498 
Battershall  v.  Davis,  286 
Battle  v.  Davis,  3,  25,  58,  169,  171 
Bayaud  v.  Fellows,  376,  548,  631 
Bayliss  v.  L,  M.  &  B.  R.  Co.,  336 


// 


TABLE    OF    CASES    CITED. 


XI 


[references 
Beach  v.  White,  373 
Beamish  v.  Austen,  380,  498,  499 
Beamish  v.  Hoyt,  409 
Beard  v.  Arbuckle,  89 
Beck  v.  Burdett,  373 
Becker  v.  Torrance,  402 
Beckford  v.  Kemble,  622 
Beckwith  v.  Carroll,  660 
Beecher  v.  Bininger,  13,  14,  47,  53, 

54,  85 
Beecher  v.  M.  &  P.  R.  M.  Co.,  30, 

544 
Beechey  v.  Smyth,  529 
Beers  v.  Chelsea  Bank,  693 
Bellr.  I,  C.  &L.  R.  Co.,  349 
Bell  v.  M'Loghlin,  76 
Bell  v.  Shibley,  165,  199,  254 
Bell's  Estate,  In  re,  223 
Belmont  v.  Erie  R.  Co.,  79,  228,  627 
Benedict  v.  St.  J.  &  W.  R.  Co.,  314 
Benneson  v.  Bill,  65,  275 
Bennett  v.   Chapin,  652,  653,   656, 

673 
Benson,  Ex  parte,  328 
Berkeley  v.  Bangs  College,  216 
Berney  v.  Sewell,  542,  575 
Berry  v.  Brett,  199,  201,  252,  264 
Berry  v.  Jones,  658 
Bertie  v.  Lord  Abingdon,  677 
Best  v.  Schermier,  563,  566,  584 
Bevan  v.  White,  657 
Beverley  v.  Brooke,  4,  6, 7,  110,  582, 

583,  689,  690 
Beytagh  v.  Concannon,  666 
Bidlock  v.  Mason,  193 
Bidwell  v.  Paul,  555 
Bigelow  v.  Andress,  376,  631 
Bill  v.  New  Albany,  etc.,  R.  Co.,  4, 

46,  56,  319 
Billings  v.  Robinson,  262,  263 
Binninger,  In  re,  57 
Birdsall  v.  Colie,  453,  454 
Birmingham  &  L.  J.  R.  Co.,  In  re, 

303 
Birt,  In  re,  98 
Bisson  v.  Curry,  90,  91 


ARE  TO   PAGES.] 

Bitting  v.  Ten  Eyck,  8,  74 

Blair  v.  St.  L.,  H.  &  K.  R.  Co.,  179, 

336,  343 
Blake  Crusher  Co.  v.  TTew  Haven, 

127 
Blakeney  v.  Dufaur,  8,  432,  470,  617 
Blatchf ord  v.  Ross,  228,  229 
Blondheim  v.  Moore,  18,  90,  376,  631 
Blood  v.  Blood,  21 
Bloodgood  i'.  Clark,  84,  85,  365,  366, 

384,  633 
Blumenthal  v.  Brainerd,  345,  347. 

352 
Blunt  v.  Clitherow,  148 
Boehm  v.  Wood,  520,  526,  527 
Boland  v.  Whitman,  188,  266 
Bolles  v.  Duff,  36,  71,  551 
Booth  v.  Clark,  2,  3,  190,  191,  425 
Bosley  v.  Susquehanna  Canal,  616, 

618 
Bostwick  v.  Elton,  417.  634 
Bostwick  v.  Menck,  407,  411,  412, 

414,  415 
Bowden  v.  Johnson,  292 
Bowen  v.  Brecon  R.  Co.,  317 
Bowen  v.  Pai'khurst,  373,  375 
Bowersbank  v.  Colasseau,  61 
Bowery  Savings  Bank  v.  Richards, 

140 
Bowling  v.  Scales,  600 
Bowling  Green  Savings    Bank  v. 

Todd,  113,  114 
Bowman  v.  Bell,  75,  87,  88 
Boyce  v.  Burchard,  439,  637 
Boyle  v.  Bettws  Llantwit  Colliery 

Co.,  559 
Boyle  v.  Towns,  181 
Brabazon  v.  Teynham,  150 
Brady  v.  Furlow,  131 
Bramley  v.  T}-ree,  28 
Brandon  v.  Brandon,  531 
Brassey  v.  N.  Y.  &  N.  E.  R.  Co., 

306 
Brasted  v.  Sutton,  567 
Brenan  v.  Preston,  461 
Brennan  v.  Kenny,  533 


Xll 


TABLE    OF    CASES    CITED. 


[references 
Brick  Company  v.  Eobinson,  85 
Brien  v.  Harrinian,  470,  658 
Brien  v.  Paul,  115 
Briggs  v .  Merrill,  131 
Brigham  v.  Luddington,  190,  192, 

424 
Brigstocke  v.  Mansel,  497 
Brinkerkoff  v.  Bostwick,  289 
Brinkman  v.  Ritzinger,  87,  555 
Bristowe  v.  Needham,  675 
Britton  v.  M'Donnell,  504 
Broad  v.  Wickham,  134,  139 
Brocklebank  v.  East  London  Rail- 
way, 326,  538 
Brodie  v.  Barry,  588 
Brooker  v.  Brooker,  596 
Brooks  v.  Greathed,  115,  392 
Brouwer  v.  Appleby,  256 
Brouwer  v.  Hill,  251,  252,  256 
Browell  v.  Reed,  610 
Brower  v.  Brower,  666 
Brown,  Ex  parte,  322,  342,  343,  345, 

346,  352,  685 
Brown,  In  re,  224 
Brown  v.  Chase,  15,  563,  564 
Brown  v.  Gilmore,  416 
Brown  v.  Hazlehurst,  664 
Brown  v.  New  York  &  Erie  Rail- 
road, 323,  327 
Brown  v.  Nolan,  505 
Brown  v.  Northrop,  2,  8,  9,  617 
Brown  v.  O'Conner,  532 
Brown  v.  Vandermeulen,  30 
Brown  v.  Wabash  R.  Co.;  354 
Browning  v.  Bettis,  365,  384 
Bruce  v.  M.  &  K.  R.  R.,  47 
Bruns  v.   Stewart    Manufacturing 

Co.,  683 
Bryan  v.  Cormick,  577,  578,  584 
Bryant  v.  Bull,  25 
Brydon  v.  Stewart,  346 
Buchanan  v.  Berkshire  Life  Insur- 
ance Co.,  27,  556,  563,  570 
Buchanan    v.    Comstock,    26,  443, 

445 
Buchanan  v.  Smith,  54 


ARE  TO  PAGES.] 

Buck  v.  Piedmont  &  Arlington  Life 

Insurance  Co.,  55,  68,  242 
Bunbury  v.  Bunbury,  622 
Bunbury  v.  Winter,  548 
Burke  v.  Burke,  80,  657 
Burlingame  v.  Parce,  565 
Burnham  v.  Bowen,  333,  335,  339 
Burrowes  v.  Molloy,  550 
Butler  v.  Sprague,  220,  475 
Butler's  Estate,  In  re,  109 
Butterworth  v.  O'Brien,  257,  2o3 


c. 


Cadle  v.  Baker,  293 
Cadle  v.  Tracy,  296 
Cagger  v.  Howard,  405 
Cagill  v.  Woolridge,  198 
Caillard  v.  Caillard,  91 
Cairns  v.  Chabert,  503,  645 
Calkins  v.  Atkinson,  261,  629 
Callaghan  v.  Callaghan,  102 
Callaghan  v.  Reardon,  149 
Callanan  v.  Shaw,  26,  541,  570 
Calvert  v.  Adams,  512 
Cammack  v.  Johnson,  152 
Camp  v.  Barney,  348 
Campbell  v.  Adams,  268 
Campbell  v.  Foster,  409 
Campbell  v.  Genet,  408 
Campbell  v.  Spratt,  683 
Candler  v.  Candler,  383 
Cane  v.  Bloomfield,  533 
Cardot  v.  Barney,  345,  346,  348 
Carey  v.  Giles,  36,  278 
Carlisle  v.  Berkley,  97,  648 
Carolina  National  Bank,  Ex  parte, 

328 
Carr  v.  Houser,  156 
Carrow  v.  Ferrior,  478,  479,  614 
Carter  v.  Hoke,  527 
Cart  wright's  Case,  224 
Casey  v.  La  Societe  de  Credit  Mo- 

bilier,  290 
Cassetty  v.  Capps,  514 
Cassidy  v.  Meacham,  369,  373,  374 


TABLE   OF   CASES   CITED. 


Xlll 


[references  are  to  pages.] 


Cassilear  v.  Simons,  121,  140 

Central  Trust  Co.  v.  T.,  D.  &  B.  R. 
Co.,  340 

Central  Trust  Co.  v.  Texas  &  St. 
Louis  Railway,  336 

Chadbourn  v.  Henderson,  544 

v.  Chadwick,  579 

Chafee  v.  Quidnick  Co.,  134,  136 

Chandler  v.  Brown,  263 

Chapman  v.  Beach,  451 

Ohappell  v.  Akin,  605 

Chappell  v.  Boyd,  522 

Chase  v  Petroleum  Bank,  200 

Chase's  Case,  481,  493,  494 

Chautauque  County  Bank  v.  Risley, 
394 

Chautauque  County  Bank  v.  White, 
393 

Cheek  i\  Tilley,  23,  24,  622 

Cheney  v.  Fisk,  185 

Chetwood  v.  Coffin,  567 

Chicago  &  Allegheny  Oil  and  Min- 
ing Co.  v.  United  States  Petro- 
leum Co.,  5,  8,  9,  482,  487,  644 

Chinnery  v.  Evans,  550 

Chipman  v.  Sabbaton,  406 

City  Bank  of  Buffalo,  In  re,  283 

City  of  Baltimore  i\  Chase,  534 

City  Pottery  Co.  v.  Yates,  278 

Clark  v.  Bininger,  223 

Clark  v.  Brockway,  204,  420 

Clark  v.  Dew,  496 

Clark  v,  Fisher,  149 

Clark  v.  Ridgely,  84,  85,  482,  496, 
643 

Clark  and  Bininger,  In  re,  47,  53 

Clarke  v.  Thomas,  262 

Clegg  v.  Fishwick,  464 

C,  M.  &  St.  P.  R  Co.  v.  Packet  Co., 

133,  198 
Coal  &  Mining  Co.   v.   Edwards, 

232 
Coates  v.  Cunningham,  28 
Coates  v.  Wilkes,  367 
Coburn  v.  Ames,  3,  696 
Cochrane,  Ex  parte,  115 


Cockburn  v.  Raphael,  603 
Coddington  v.  Bispham,  545 
Coddrington  v.  Tappan,  442 
Codrington  v.  Johnstone,  547 
Codrington  v.  Parker,  575,  576,  577 
Coe  v.  New  Jersey  Midland  R.  Co., 

339,  340 
Cofer  v.   Echerson,  482,  484,  485, 

486 
Cohen,  In  re,  120 
Cohen  v.  Meyers,  27,  376,  377,  378, 

631 
Colburn  v.  Cooper,  667 
Cole  v.  O'Neill,  493 
Coleman  v.  Salisbury,  121 
Colgate  v.  Michigan  Lake  Shore  R. 

Co.,  696 
Collier  v.  Sapp,  502 
Collins  v.  Case,  147 
Collins  v.  Richart,  522 
Colt  v.  Brown,  199,  200,  201 
Columbia  Insurance  Co.  v.  Stevens, 

273,  674 
Columbian  Book  Co.  v.  De  Golyer, 

127 
Columbian  Insurance  Co.,  In  re, 

678 
Colvin,  In  re,  144,  613,  672,  681, 

689,  691 
Combs  v.  Smith,  353 
Commercial    &    Savings    Bank  v. 

Corbett.  75,  563 
Commissioners  v.  Harrington,  529 
Commonwealth  v.  Eagle  Fire  Insur. 

ance  Co.,  670 
Commonwealth  v.  Franklin  Insur- 
ance Co.,  218 
Commonwealth  v.  Gould,  104 
Commonwealth  v.  Hide  &  Leather 

Insurance  Co.,  127 
Commmonwcalth  v.  Runk,  209,  274 
Commonwealth  Fire  Insurance  Co., 

In  re,  648,  668,  669,  671 
Compton  v.  Bearcroft,  84,  85 
Comyn  v.  Smith,  149 
Cone  v.  Combs,  556 


XiV 


TABLE  OF  CASES  CITED. 


Coney,  In  re,  25,  591 

Cougden  v.  Lee,  369,  370 

Conger  v.  Sands,  419 

Conkling  v.  Butler,  47,  56,  215,216, 

308 
Conley  v.  Deere,  114 
Connah  v.  Sedgwick,  381 
Connelly  v.  Dickson,  87,  554,  556 
Conner  v.  Allen,  462 
Conro  v.  Gray,  9,  232 
Const  v.  Harris,  429,  458 
Conyers  v.  Crosbie,  214 
Cook  v.   Citizens    National  Bank, 

119,  138 
Cook  v.  Cole,  113,  203 
Cook  v.  Sharrnan,  674 
Cooke  v.  Gwynn,  8,  617 
Cooke  v.  Town  of  Orange,  175 
Cookes  v.  Cookes,  62,  63 
Cooney  v.  Cooney,  403 
Coope  v.  Bowles,  163,  164,  187,  418 
Cooper  v.  Reilly,  24 
Copper  Hill  Mining  Co.  v.  Spencer, 
683,  684 

Corbet  v.  Mahon,  80,  397 

Corcoran  v.  Doll,  523,  644 

Corey  v.   Long,  2,  3,  12,  500,  620, 
665,  671 

Corrigan  v.  Trenton  Delaware  Falls 
Co.,  284,  531 

Cortleyeu  v.  Hathaway,  563,  566, 
567,  584 

Coughron  v.  Swift,  11,  619 

Courand  v.  Hamner,  676 

Covington  Drawbridge  Co.  v.  Shep- 
herd, 237 

Cowdrey  v.  G.,  H.   &  H.   R.   Co., 
326,  332 

Cowdrey  r.  The  Railroad  Co.,  327, 
650,  652,  654,  667,  672,  686 

Cox  v.  Peters,  453,  454 

Crane  v.  Ford,  155 

Crane  v.  McCoy,  9,  57,  623 

Cranstown  v.  Johnston,  622 

Crawford  v.  Ross,  4,  5,  681,  683,  681 

Crawford  v.  Spurling,  27 


[references  are  to  pages.] 

I  Creed  v.  Moore,  511 
Cremen  v.  Hawkes,  12,  510,  620 
Creuze  v.  Bishop  of  London,  60,  78 
Crewe  v.  Edleston,  316 
Crine  v.  Davis,  402 
Cronin  v.  McCarthy,  536,  645 
Croton  Insurance  Co.,  In  re,  272 
Crow  v.  Red  River  County  Bank, 

548 
Crow  v.  Wood,  76,  512 
Crowd  er  v.  Moone,  74,  91 
C.  S.  &  C.  R.  Co.  v.  Sloan,  28 
Curling  v.  Marquis  Townshend,  82, 

364 
Curran  v.  Craig,  210 
Curtis  v.  Leavitt,  2,  151,  250,  251 
Curtis  v.  Mcllhenny,  163,  164 


D. 

Dale  v.  Kent,  18,  27 

Dalmer  v.  Dashwood,  577,  579,  584 

D' Alton  v.  Trinileston,  499 

Damsmont  v.  Patton,  520 

Darrow  v.  Lee,  590 

Davenport  v.  City  Bank  of  Buffalo, 

286 
Davenport  v.  Kelly,  402,  444 
Davenport  v.  Receivers,  342 
Davies  v.  Cracraft,  223 
Davies  v.  Lathrop,  353 
Davis  v.  Barrett,  40,  72,  97,  549,  622 
Davis  v.  Browne,  84 
Davis"  T".  Dirket  :of  "Marl trough,  2, 

33,  388,  391,  493,  507,  508,  580.  0*  >  3 
Davis7&  Dtm5anv2l!3;-§54 
Davis  v.  Gray^307V«29'r>    .«  - 
Davis  v.  GroViel-  &Qy4&FL  .'i 
Davis  wl  RSavig/M  K  ■&  & 
Davis  v.  Stover,  203  86] 

Davis  ^rTlifi  RaflroMiG&npa-ny.  .Vl 
Davy  v.  Gronow,  608 
Dawson  ^SRojaifespittKS"^  •<*  w 
Dawson  v.  Yates,  ,88£IiW 
Day,  In  re,  MM4»-.wtA  M  onrdoO 
Day  v.  CroSt  t6«ftt»q  '-^  ^^-' 


TABLE    OF    CASES    CITED. 


XV 


[references 

Dayton  v.  Connah,  186 

Dease  v.  Reilly,  662 

De  Bemer  v.  Drew,  242 

Defries  v.  Creed,  98 

De  Groot  v.  Jay,  205,  206 

Dehon  v.  Foster,  G23 

Delaney  v.  Tipton,  GOT 

Delany  v.  Mansfield,  146 

Delaware,  Lackawanna  &  Western 

R.  Co.  v.  ErieR.  Co.,  303 
Demain  v.  Cassidy,  221 
Deming  v.  New  York  Marble  Co., 

128 
Denniston  v.  Chicago,  Alton  &  St. 

Louis  R.  Co.,  336 
Des  Moines  Gas  Co.  v.  West,  565 
Devendorf  v.  Beardsley,   199,  254, 

266,  267 
Devendorf  v.  Dickinson,  2,  3,  167, 

675 
De  Visser  v.  Blackstone,  109,   134, 

536 
Devlin  v.  Hope,  78,  593 
Devoe  v.  Ithaca  &  Owego  R.  Co., 

93,  280 
De  Walt  v.  Kinard,  482 
De  Winton  v.  Mayor  of  Brecon,  115, 

118,  21G,  314 
Dick  v.  Laird,  466 
Dickerson  v.  Van  Tine,  385 
Dixon  v.  Rutherford,  159 
Dobbin  v.  Adams,  495 
Dobson  v.  Simonton,  233 
Dodge  v.  Pyrolusite  Manganese  Co., 

376 
Dollard  v.  Taylor,  30,  366,  384 
Dougherty  v.  Jones,  683 
Dougherty  v.  McDougald,  596 
Douglas  v.  Cline,  339,  540 
Dow  v.  M.  &  L.  R.  Co.,  313 
Dowling  v.  Hudson,  94 
Downs  v.  Allen,  216 
Downs  v.  Hammond,  265,  266 
Drake  v.  Goodrich,  527 
Drake  v.  Thyng,  673 
Drever  v.  Maudesley,  218 


ARE  TO   PAGES.] 

Drewry  v.  Barnes,  12,  33,  620 
Drought  v.  Percival,  509 
Drury  v.  Roberts,  26, 456,  684 
Dubois  v.  Cassidy,  411 
Duckworth  v.  Trafford,  83 
Dugger  v.  Collins,  117 
Dumville  v.  Ashbrooke,  318,  630 
Duncan  r.  Campau,  30,  518 
Dunn,  Ex  parte,  6,  306 
Dunn  v.  McNaught,  447,  639 
Du  Val  v.  Marshall,  599 

E. 

Eagle  Iron  Works,  In  re,  60,  61,  68, 

78,  286 
Eames  v.  Doris,  254,  G29 
Eaton  &  Hamilton  R.  Co.  v.  Var- 

num,  28 
Edwards  v.  Edwards,  98 
Edwards  v.  Norton,  117 
Eisenmann  v.  Thill,  47,  49 
Ellard  v.  Cooper,  695 
Ellett  v.  Newman,  588 
Ellicott  v.  United  States  Insurance 

Co.,  282,  283 
Ellicott  v.  Warford,  2,  3,  8,  617 
Ellis  v.  Boston,  Hartford  &  Erie  R. 

Co.,  6,  326,  616 
Ellis  v.  Little,  151,  217,  290,  291 
Embree  v.  Shideler,  265 
Emeric  v.  Alvarado,  28 
Emerson  &  Wall's  Appeal,  482 
Empire  City  Bank,  In  re,  87,  246 
Erie  R.  Co.  v.  Heath,  246 
Erwin  v.  Davenport,  345 
Eslava  v.  Crampton,  568,  509 
Esterlund  v.  Dye,  536 
Evans,  E.r  parte,  98 
Evans  v.  Coventry,  76,  241 
Evans  v.  Trimountain  Mutual  Fire 

Insurance  Co.,  271 
Evelyn  v.  Lewis,  114,  115,  116,  206, 

209,  210,  624 
Everett  v.  The  State,  170 
Express  Co.  v.  Railroad  Co.,  353 


XVI 


TABLE    OF    CASES    CITED. 


[references  are  to  pages.] 


Eyre  v.  Eyre,  533 
Eyre  v.  M'Donnell,  15G,  158 
Eyton  v.  Denbigh,  Ruthin  &  Cor- 
win  R.  Co.,  307 


F. 


Fairbairn  v.  Fisher,  26,  600,  606 

Fairburn  v.  Pearson,  446 

Farley  v.  St.  P.,  M.  &  M.  R.  Co., 

308 
Farmers  Bank  v.  Beaston,  112, 113, 

128 
Farmers  Loan  &  Trust  Co.  v.  Cen- 
tral Railroad,  354,  651,  655,  6T9 
Farmers    &    Mechanics    Bank    v. 

Jenks,  200,  261,  264 
Farmers    &    Merchants  Insurance 

Co.  v.  Needles,  190,  192 
Farnsworth  v.  Wood,  253 
Farran  v.  Morris,  681 
Fassett  v.  Tallmadge,  81 
Faulkner  v.  Daniel,  495,  575,  576 
Favorite  v.  Deardoff,  517 
Fay  v.  Erie  &  Kalamazoo  Railroad 

Bank,  278,  287,  692 
Fellows  v.  Heermans,  8,  25,  30 
Fenton  v.  Lumberman's  Bank,  79 
Ferrior,  In  re,  614 
Ferry  v.  Bank  of  Central  New  York, 

287,  681,  604 
Fessenden  v.  Woods,  407,  408 
Fetherstone  v.  Mitchell,  503 
Field  v.  Jones,  127,  128,  397,  689, 

690 
Field  v.  Ripley,  90 
Fifield  v.  Northern  Railroad,  346 
Fifth  National  Bank  v.  P.  &  C.  S. 

R.  Co.,  296,  681 
Fifty-four  First  Mortgage  Bonds, 

In  re,  67,  322 
Finch  v.  Houghton,  568 
Fincke  V.  Funke,  469 
Fingal  v.  Blake,  495,  498 
Finnin  v.  Malloy,  403 
First  National  Bank  v.  Gage,  398 


Fish  v.  Potts,  284,  534 
Fitch  v.  Wetherbee,  155 
Fitzburgh  v.  Everingham,  365,  366, 

634 
Flagler  v.  Blunt,  11,  12 
Fletcher  v.  Dodd,  669 
Flint  v.  Webb,  367,  368 
Flood  v.  Lord  Aldborough,  678 
Fogarty  v.   Bourke,    15,   368,  369, 

398 
Ford  v.  Rackham,  534,  676 
Fort  Wayne,  M.  &  C.  R.  Co.  v. 

Mellett,  115 
Fosdick  v.  Car  Company,  341 
Fosdick  v.  Schall,  333,  335,  339,  340 
Foster  v.  Barnes,  161 
Foster  v.  Foster,  534,  670 
Foster  v.  Townshend,  182,  536 
Fowler,  In  re,  590 
Francklyn  v.  Sprague,  220 
Frank  v.  Morrison,  175,  189,  261 
Fraser  v.  City  Council,  606 
Frazier  v.  Barnum,  398 
Freeholders  v.  State  Bank,  67 
Freeman  v.  Winchester,  167,  168, 

171,  329 
Frelinghuysen  v.  Baldwin,  296 
French  v.  Gifford,  90,  91,  650,  658, 

659 
French  Bank  Case,  28,  228 
Fripp  v.  The  Bridgewater  Co.,  580 
Fripp  v.  The  Chard  R.  Co.,  315,  316 
Frisbee  v.  Timanus,  502,  503 
Frisbie  v.  Bateman,  563, 566, 568, 584 
Fuggle  v.  Bland,  25 
Fuller  v.  Jewett,  349 
Fuller  v.  Taylor,  366,  384 
Furlong  v.  Edwards,  4,  389,  554,  694 


G. 


Gadsden  v.  Whaley,  60S 
Gage  v.  Smith,  398 
Galluchat,  Exxar:e,  602 
Galster  v.  Syracuse  Savings  Bank, 
216 


TABLE   OF   CASES    CITED. 


XV11 


[references  are  to  pages.] 


Galwey   v.  United    States    Steam 

Sugai  Refining  Co.,  238 
Ganebin  v.  Phelan,  127 
Gardiner  v.  Tyler,  648,  653 
Gardner  v.  Blane,  97 
Gardner  v.  Howell,  27 
Gardner  v.  London,  C.  &  D.  R.  Co., 

301 
Gardner  v.  Smith,  423 
Garland  v.  Garland,  60,  65 
Garr  v.  Hill,  534 
Garretson  v.  Weaver,  452,  640 
Garrett  v.  City  of  Memphis,  365, 

372 
Garver  v.  Kent,  171 
Gas    Light    &    Banking    Co.    v. 

Haynes,  251,  261 
Gaylord  v.  Fort  Wayne,  Muncie  & 

Cincinnati  R.  Co.,  47,  319 
Geisse  v.  Beall,  120,  141 
Gelpeke  v.  Milwaukee  &  Horicon 

R.  Co.,  58,  124 
Gere  v.  Dibble,  113,  391,  402 
Gibbins  v.  Mainwaring,  94 
Gibbons  v.  Howell,  538 
Gibbs  v.  David,  525 
Gibert  v.  W.  C,  V.  M.  &  G.  S.  R. 

Co.,  312,  332,  341 
Gibson  v.  Martin,  92 
Gill  v.  Balis,  177 
Gillet  v.  Fairchild,  177,  186 
Gillet  v.  Moody,  249,  256,  257 
Gillett  v.  Phillips,  203,  257,  270 
Gladdon  v.  Stoneman,  601 
\  Glenn  v.  Gill,  133 
Glenville  Woolen  Co.  v.  Ripley,  245 
Glossup  v.  Harrison,  106 
Goddard  v.  Stiles,  414,  415 
Gooch  v.  Hawoi'th,  122 
Goodale  v.  Fifteenth  District  Court, 

518 
Goodhue  v.  Daniels,  546 
Goodman  v.  Whitcomb,  451 
Goodyear  v.  Betts,  12,  381 
Gordon  v.  Anthony,  421 
Goss  v.  Southall,  184 
b 


Gould  v.  Tryon,  15,  368 
Goulding  v.  Bain,  432 
Gouthwaite  v.  Rippon,  389,  390,  548 
Gowan  v.  Jeffries,  458 
Graff  v.  Bonnett,  409,  423 
Graffenried    v.    Brunswick  &  Al- 
bany R.  Co.,  205 
Grant  v.  Bryant,  651 
Grant  v.  City  of  Davenport,   131, 

624 
Grant  v.  Webb,  30 
Grantham  v.  Lucas,  389 
Gravenstine's  Appeal,  75,  230,  628 
Gray  v.  Chaplin,   15,  16,  233,  234, 

620 
Gray  v.  Gaither,  600 
Graydon  v.  Church,  190,  197 
Great  Western  R.  Co.  v.  Birming- 
ham &  Oxford  Junction  R.  Co. , 
616 
Green  v.  Bookhart,  423 
Green  v.  Bostwick,  411 
Green  v.  Green,  120,  123 
Green  v.  Hicks,  385 
Green  v.  Walkill  National  Bank, 

289 
Green  v.  Winter,  169 
Gregory  v.  Gregory,  19,  468,  482, 

484 
Grenfell  v.   Dean  and  Canons  of 

Windsor,  695 
Gresley  v.  Adderley,  580 
Greville  v.  Fleming,  9 
Gridley  v.  Conner,  429,  471 
Griesel  v.  Schmal,  188 
Griffith  v.  Griffith,  101,  120,   123, 

224.  511 
Grote  v.  Bing,  81 
Guardian  Savings  Institution,  In 

re,  106 
Guardian    Savings    Institution    v. 
Bowling   Green   Savings  Bank, 
147 
Guernsey  V.  Powers,  521 
Gunby  v.  Thompson,  27,  522 
Gunn  v.  Harvey,  592 


XV  111 


TABLE   OF   CASES    CITED. 


[references 
Gurden  v.  Badcock,  678 
Guy  v.  Ide,  569 

H. 

Haas  v.  Chicago  Building  Society, 

87,  554,  555 
Hackensack  Water  Co.  v.  De  Kay, 

160 
Hackett  v.  Snow,  541 
Hackley  v.  Draper,  154,  159 
Hade  v.  McVay,  200 
Hagedon  v.  Bank  of  Wisconsin,  282 
Hager  v.  Stevens,  34,  233,  234,  510 
Haggarty  v.  Pittman,  376,  377,  378, 

631 
Haigh  v.  Grattan,  657 
Haight  v.  Burr,  461 
Haines  v.  Carpenter,  596,  597 
Hale  v.  Frost,  338 
Hale  v.  Hale,  466 
Hale  v.  Nashua  &  Lowell  Railroad, 

331 
Hall  v.  Hall,  17,  450 
Hall  v.  Jenkinson,  519 
Hamberlain  v.  Marble,  508 
Hamburgh  Manufacturing  Co.  v. 

Edsall,  9,  10,  506,  616 
Hamil  v.  Haniil,  473 
Hamilton  v.  Accessory  Transit  Co., 

243 
Hamilton  v.  Brewster,  101 
Hamlin  v.  Wright,  412,  413 
Hammer  v.  Kaufman,  66 
Hammock  v.  Loan  &  Trust  Co.,  74 
Hancock,  In  re,  18 
Hand  v.  Railroad  Co.,  325 
Hand  v.  Savannah  &  Charleston  R. 

Co.,  332 
Hanna  v.  Hanna,  9,  18 
Hanover  Fire  Insurance  Co.  v.  Ger- 

mania  Fire  Insurance  Co.,  64 
Harding  v.  Glover,  445,  453 
Hardwick  v.  Hook,  175,  183 
Hardy  v.  McClellan,  18 
Hargrave  v.  Hargrave,  516,  646 


ARE  TO  PAGES.] 

Harman  v.  Foster,  669 

Harroll  v.  Kent,  171 

Harris  v.  Sangston,  684 

Harrison  v.  Boydell,  678 

Harrison  v.  Dignan,  150 

Harrison  v.  Fitzgerald,  529 

Harrup  v.  Winslet,  596 

Hart  v.  Marshall,  619 

Hart  v.  Tims,  371 

Hart  v.  Tulk,  495 

Harvey  v.  Allen,  296,  297 

Harvey  v.  Lord,  292 

Harvey  v.  Varney,  40,  446 

Hatch  v.  Daniels,  26,  684 

Hatcher  v.  Massey,  587 

Hawkins  v.  Gatheroole,  398 

Hawkins  v.  Luscombe,  87 

Hayden  v.  Shearman,  498 

Hayes  v.  Brotzman,  175,  189 

Hayes  v.  Dickinson,  550 

Hayes  v.  Heyer,  457 

Hayes  v.  Kenyon,  253 

Hayner  v.  Fowler,  412 

Haywood  v.  Cope,  616 

Hazard  v.  Durant,  190 
Hazelrigg  v.  Bronaugh,  136 
Hazeltine  v.  Granger,  544 
Hearn  v.  Tennant,  138 
Heathcot  v.  Ravenscroft,  444,  638 
Heather  ton  v.  Hastings,  436 
Heavilon  v.  Farmers  Bank,  77 
Heermaus  v.  Clarkson,  152 
Helme  v.  Littlejohn,  170,  171,  172, 

174,  189,  466 
Henderson  v.  Walker,  345 
Henn  v.  Walsh,  23,  430,  456,  636, 

640 
Henry  v.  Henry,  443 
Henry  v.  Kaufman,  215,  222 
Henshaw  v.  Wells,  75,  585 
Herbert  v.  Greene,  563,  566 
Herman  v.  Dunbar,  676,  695 
Herndon  v.  Hurter,  660 
Heroy  v.  Gibson,  367 
Herrick's  Minors,  In  re,  105 
Hervey  v.  Fitzpatrick,  596;  603 


TAELE    OF    CASES    CITED. 


XIX 


[refeuexces  are  to  pages.] 


Hibbert  v.  Jenkins,  70,  593 

Hicks  v.  Hicks,  613 

Hicks  v.  I.  &  G.  N.  R.  Co..  350, 

355 
Higgins  v.  Bailey,  468 
Higgins  v.  Gillesheirner,  412 
Hiles  v.  Case,  342 
Hiles  v.  Moore,  87,  575,  576,  577 
Hill  v.  Robertson,  563,  568 
Hill  v.  Taylor,  524 
Hinckley,  In  re,  655 
Hinckley   v.   G.,  C.  &  S.  R.  Co., 

679 
Hinckley  v.  Railroad  Co.,  648,  655, 

668 
Hitcben  v.  Birks,  42 
Hlawacek  v.  Bohman,  509 
Hobart  t>.  Ballard,  432,  433 
Hobbouse  v.  Hollcombe,  530 
Hobson  v.  Sherwood,  529 
Hoge  v.  Hollister,  555 
Hoi  brook  v.  Receivers  of  American 

Fire  Insurance  Co.,  270 
Holcornbe    v.    Executors    of   Hol- 

combe,  653 
Holcornbe  v.  Johnson,  225 
Holden's  Administrators  v.  McMa- 

kin,  27,  463,  641 
Holdrege  v.  Gwynne,  376,  631 
Holland  v.  Cork  &  Kinsale  R.  Co., 

315,  397 
Hollenbeck  v.  Donnell,  563,  565 
Hollier  v.  Hedges,  529 
Hollis,  Ex  parte,  140 
Hollis  v.  Bryant,  508 
Hollister  v.  Barkley,  26,  684 
Holmes  v.  Bell,  55S 
Holmes  v.  Holmes,  510 
Honegger  v.  Wettstein,  211 
Hooke  v.  Town  of  Orange,  127 
Hooper  v.  Winston,  2,  3,  145,  663, 

669 
Hoover  v.  M.   &  G.  L.  R.  Co.,  357, 

358 
Hope  Mutual  Life  Insurance  Co.  v. 

Taylor,  190,  192,  425 


Hopkins  v.  Taylor,  255,  342 
Hopkins  v.  Worcester  &  Birming- 
ham Canal  Proprietors,  314 
Horlock  v.  Smith,  111 
Horton  v.  White,  513 
Hottenstein  v.  Conrad,   8,  28,  76, 

435,  617 
Houlditch  v.  Lord  Donegal,  40,  C23 
How  v.  Jones,  670,  671,  679 
Howard  v.  Palmer,  80,  406 
Howard  v.  Papera,  600 
Howard  v.  Whitman,  279 
Howe  v.  Deuel,  228,  627 
Howe  v.  Jones,  91 
Howe  v.  Willard,  138 
Howell  v.  Dawson,  25 
Howell  v.  Ripley,  15,  581 
Howes  v.  Davis,  653,  664,  671 
Hovey  v.  McDonald,  153,  679 
Hoyt  v.  Thompson,  42,  43,  193,  37:; 
Hoyt  v.  Thompson's  Executor,  43 
Hubbard  v.  Guild,  419 
Hubbard  v.  Hamilton  Bank,  282 
Hubbard  V.  Hubbard,  376,  631 
Hubbell  v.  Dana,  184,  212 
Hudson  v.  Plets,  405 
Huerstel  v.  Lorillard,  504 
Hughes  v.  Hatchett,  522 
Huguenin  v.  Baseley,  8,  491,  617 
Hull  v.  Thomas,  134,  138,  139 
Hulse  v.  Wright,  376,  377 
Hulst,  In  re,  53 
Humphreys  V.  Allen,  358,  361 
Hungerford  v.  dishing,  75 
Hunt  v.  Columbia  Insurance  Co., 

42,  192, 193 
Hunt  v.  Wolfe,  3,  4,  182,  503 
Hursh  v.  Hursh,  74,  540 
Hutchinson  v.  Green,  47 
Hutchinson  v.  Hampton,  658 
Hyatt  v.  McMabon,  355 
Hyde  v.  Lynde,  199,  252,  256 
Hyde  Park  Gas  Co.  v.  Kerber,  10, 

234 
Hyman  r.  Kelly,  563,  509 
Hyslop  v.  Hoppock,  93 


XX 


TABLE    OF   CASES    CITED. 


Iddings  v.  Bruen,  123,  157,  3G5,  404 
Iglehart  v.  Bierce,  171,  179,  197 
I.  &  G.  N.  R.  Co.  v.  Ormond,  350, 

355 
Illinois  Trust   &  Savings  Bank  v. 

Smith,  219 
Imperial  Mercantile  Credit  Associ- 
ation v.   Newry  &  Armagh  R. 
Co.,  80,  315 
Ingersoll  v.  Cooper,  171,  173 
Ireland  v.  Eade,  149,  676 
Ireland  v.  Nichols,  500,  689,  690 
Irons    v.   Manufacturers    National 
Bank,  293 

J. 

Jackson  v.  De  Forest,  435,  436,  452, 

467 
Jackson  v.  Jackson,  612 
Jackson  v.  Roberts,  264,  267,  269 
Jackson  v.   Sheldon,  379,  448,  632 
Jackson  v.  Van  Slyke,  268 
Jacobs  v.  Gibson,  561 
Jacobs  v.  Turpin,  251 
Jacobson  v.  Allen,  253 
Jacox  v.  Clark,  620 
Janeway  v.  Green,  590 
Jay,  Ex  parte,  419 
Jay  v.  De  Groot,  183 
Jay's  Case,  210,  624 
Jeffer3"s  v.  Dickson,  551,  553 
Jefferys  v.  Smith,  517 
Jenkins  v.  Briant,  677 
Jenkins  v.  Jenkins,  601 
Jewett  v.  Miller,  156,  157 
Jolmes  v.  Claughton,   116,  130,  624 
Johns  v.  Johns,  72,  84,  85,  600 
Johnson,  Ex  parte,  345 
Johnson  v.  Farnum,  376 
Johnson  v.  Garrett,  660 
Johnson  v.  Gunter,  147,  148 
Johnson  r.  Martin,  98,  184 
Johnson  v.  Tucker,  365 


[references  are  to  pages.] 

Johnson  v.  Woodruff,  388 
Johnston  v.  Hanner,  28 
Johnston  v.  Henderson,  505 
v.  Jolland,  69,  593,  611,  669 


Jolly  v.  Arbuthnot,  551 

Jones  v.  Boyd,  520 

Jones  v.  Dougherty,  84,  86,  383 

Jones  v.  Frost,  497 

Jones  v.  Goodrich,  41 

Jones  v.  Graves,  91      V 

Jones  v.  Jones,  479 

Jones  v.  Keene,  650,  651,  652 

Jones  v.  Pugli,  386,  388,  493 

Jones  v.  Schall,  18 

Jordan  v.  Beal,  497,  522 

Jordan  v.  Miller,  428 

Jordan  v.  Wells,  206 

Journeay  v.  Brown,  31,  382 

Justice  v.  Kirlin,  171 

K. 

Kaighn  v.  Fuller,  684 

Kain  v.  Smith,  349 

Kaiser  v.  Kellar,  2,  3,  216 

Kansas  Pacific  R.  Co.  v.  Wood,  350 

Kansas  Rolling  Mill  Co.  v.  A.,  T.  & 

S.  F.  R.  Co.,  28 
Katsch  v.  Schenck,  458,  459 
Keach,  In  re,  421 
Kean  v.  Colt,  12,  16,  86 
Keen  v.  Breckenridge,  205,  207 
Keenan  v.  Shannon,  507 
Keene  v.  Gaehle,  225 
Keep  v.  Michigan  Lake  Shore  R. 

Co.,  46,  310,  318,  560,  563,  571 
Kehler  v.  Jack  Manufacturing  Co., 

376 
Kellar  v.  Williams,  3,  473 
Kelly,  In  re,  342 
Kelly  v.  Butler,  498 
Kelly  v.  Rutledge,  505,  685 
Kelly  v.  Trustees,  299,  310 
Kennedy  v.  Gibson,  291,  292,  295 
Kennedy  v.  I.,  C.  &  L.  R.  Co.,  206, 

208,  347 


TABLE    OF    CASES    CITED. 


XXI 


[references  are  to  paces.] 


Kennedy  v.  St.  Paul  &  Pacific  R. 

Co.,  318,  323,  324,  325,  357,  388 
Kennedy  v.  Thorp,  416 
Keogh  'v.  McManus,  583 
Kerchner  v.  Fairley,  563 
Kerr  v.  Brandon,  66,  107 
Kerr  v.  Potter,  432,  433,  636 
Kerr  v.  White,  38 
Kilgore  v.  Hair,  65 
Kimball  v.  Ives,  251 
Kirnberly  v.  Blackford,  184 
Kimberly  v.  Goodrich,  184 
Kirnberly  v.  Stewart,  184 
King  v.  Cutts,  2,  146,  171,  173 
King  v.  O.  &  M.  R.  Co.,  134,  307 
Kinney  v.   Crocker,   58,   206,    207, 

347 
Kipp  v.  Hanna,  504 
Kirby  v.  Ingersoll,  458,  459 
Klein  v.  Jewett,  342,  345 
Knickerbocker  Bank,  In  re,  69,  246 
Knickerbocker  Life  Insurance  Co. 

v.  Hill,  560 
Knight  v.  Duplessis,  41,  495,  600 
Knight  v.  Nash,  30,  368 
Knight  v.  Plimouth,  221 
Knighton  v.  Young,  494,  644 
Knode  v.  Baldridge,  444 
Knott  v.  Receivers  of  Morris  Canal 

&  Banking  Co.,  147 
Koontz  v.  Northern  Bank,  160,  537 
Kron  v.  Dennis,  500 
Kronberg  v.  Elder,  198 
vKyme  v.  Dignan,  150 

L. 

La  Chaise  v.  Lord,  379,  632 
Ladd  v.  Harvey,  75,  76,  592 
Lafayette    Bank  v.    Buckingham, 

249,  6S5 
Lanauze  v.  Belfast,  Holy  wood  & 

Bangor  R.  Co.,  505,  581,  582 
Lancashire  v.  Lancashire,  482,  486 
Lane  v.  Sterne,  134,  135 
Lane  v.  Townsend,  674 


Langdon  v.  Vermont  &  Canada  R. 

Co.,  323,  336,  361 
Langford  v.  Langford,  40,  134,  141, 

549,  622 
Langley  v.  Hawk,  601 
Lanier  v.  Gayoso  Savings  Institu- 
tion, 201 
Lansing  v.  Manton,  395 
Largan  v.  Bowen,  692 
Latham  v.  Chafee,  4,  85,  587 
Latlirop  v.  Knapp,  183 
Latimer  v.  A.  &  B.  R.  Co.,  301 
Lavender  v.  Lavender,  G89 
Law  v.  Ford,  457 
Law  v.  Glenn,  551 
Lawrence  v.  Greenwich  Fire  Insur- 
ance Co.,  232 
Lawrence  v.  McCready,  252,  204 
Lawson  v.  Ricketts,  695 
Leach  v.  Tisdal,  72 
Leathers  v.  Shipbuilders  Bank,  283 
Leavitt  v.  Yates,  8,  9,  13,  19,  232, 

617 
Leddel's  Executor  v.  Starr,  74,  608 
Lee  v.  Cone,  132 

Le  Grand  v.  O'Neill,  80 

Lehigh  C.  &  N.  Co.  v.  Central  R. 
Co.,  208,  325 

L'Engle  v.  Florida  Central  R.  Co., 
308,  686 

Lenox  v.  Notrebe,  5,  14 

Levenson  v.  Elson,  588 

Levi  v.  Karrick,  34,  121 

Levy  v.  Cavanagh,  130 

Levy  v.  Ely,  379,  632 

Lewis  v.  Campau,  29 

Lewis  v.  Singleton,  138 

Libby  v.  Rosekr.ms.  159,  249,  273 

Ligon  v.  Bishop,  387 

v.  Lindsey,  40,  622 


Litchfield  Bank  v.  Church,  166 
Litchfield  Bank  v.  Peck,  166 
Livingston  v.  Bank  of  New  York, 

279,  285 
Livingston  v.  Olyphant,  178 
Livingston  v.  Pettigrew,  217 


XX11 


TABLE    OF    CASES    CITED. 


[references 
Lloyd,  In  re,  65,  66 
Lloyd  v.  Passingham,  386,  482,  643 
Lloyd  v.  Trimleston,  483,  496 
Lofsky  v.  Maujer,  545,  547 
Loney  v.  Penniman,  469 
Long  Branch  &  Sea  Shore  R.  Co., 

In  re,  306,  690 
Lonsdale  v.  Church,  669 
Loomis  v.  McKenzie,  438 
Lorch  v.  Aultman,  113,  155 
Lord  Fingal  v.  Blake,  483 
Lottimer  v.  Lord,  32,  151,  152,  448 
Louisville,  New  Albany  &  Chicago 

R.  Co.  v.  Cauble,  350 
Low  v.  Holmes,  21 
Lowe  v.  Lowe,  614,  668 
Lowe  v.  Stephens,  419 
Lowry  v.  Smith,  161 
Ludgater  v.  Channell,  103 
Lumsden  v.  Fraser,  527 
Lupton  v.  Stephenson,  64 
Lycoming  Insurance  Co.  v.  Wright, 

193,  265 
Lyne  v.  Lock  wood,  499 

M. 

Mabry  v.  Harrison,  662 

Macartney  v.  Walsh,  535 

Madden,  In  re,  493 

Madgwick  v.  Wimble,  429,  463,  464 

Magan  v.  Fallon,  225 

Magee  v.  Cowperthwaite,  648,  652 

Maguire  v.  Allen,  94 

Maher  v.  Bull,  473,  641 

Mahon  v.  Crothers,  567 

Main  v.  Ginthert,  572 

Maish  v.  Bird,  95,  549 

Malcolm  v.  Montgomery,  75,  95,  383 

Malcolm  v.  O'Callaghan,  656 

Malone  v.  Buice,  591 

Manchester  &  Milford  R.  Co.,  In 

re,  303 
Mangle  v.  Lord  Fingall,  535,  645 
Mauley  v.  Rassiga,  186,  412 
Manlove  v.  Burger.  171,  175.  265 


ARE  TO  PAGES.] 

Manlove  v.  Naw,  265 
Mann  v.  Fail-child,  286 

Mann  v.  Pentz,  262,  404,  420 

Mann  v.  Stennett,  105 

Manners  v.  Furze,  97 

Manning  v.  Evans,  407,  409 

Manning  v.  Monaghan,  222 

Mansell  v.  Egan,  102,  105 

Mapes  v.  Scott,  500 

Marr  v.  Little  wood,  41 

Marsh  v.  Hussey,  675 

Marten  v.  Van  Schaick,  435,  436, 

437,  457 
Martin  v.  Black,  130 
Martin  v.  N.  Y.,  S.  &  W.  R.  Co.,  326 
Marvine  v.  Drexel's  Executors,  606 
Mason  v.  Mason,  538,  645 
Mathews  v.  Neilson,  395,  605 
Maund  v.  Allies,  472 
May  v.  Grcenhill,  376 
May  v.  Priutup,  47 
Maynard  v.  Bond,  112 
Maynard  v.  Railey,  92,  448 
Mayo  v.  McPhaul.  484 
Mays  v.  Rose,  4,  8,  9,  13,  94,  109, 

110,  386,  524,  616 
Mays  v.  Wherry,  512 
Maythorue  v.  Palmer,  621 
McAlpin  v.  Jones,  193,  194 
McArthur  v.  Montclair,  655 
McBride  v.  Clarke,  662 
McCan  v.  O'Ferral,  224 
McCarthy  v.  Peake,  8,  45,  446,  619, 

639 
McCaskill  v.  Warren,  79 
McCaslin  v.  State,  521 
McCombs  v.  Merryhew,  121 
McCosker  v.  Brady,  588,  689 
McCraith  v.  Quin,  400 
McCulloch  v.  Norwood,  212 
McCullough  v.  Merchants  Loan  & 

Trust  Co.,  67 
McCurdy  v.  Bowes,  359 
McDonald  v.  Carney,  184 
McDonald  v.  Ross-Lewin,  254,  264, 

268 


TABLE    OF    CASES    CITED. 


XX111 


[references 

McDonnell  V.  White,  529,  530 
McElmoyle  v.  Cohen,  191 
McElvey  v.  Lewis,  453 
McElwain  v.  Willis,  373 
McEvers  v.  Lawrence,  213 
McEwen  v.  Brewster,  409 
McGoldrick  v.  Slevin,  376,  377 
Mcllrath  v.  Snure,  165 
McKinney  v.  Ohio  &  Mississippi  R. 

Co.,  350 
McLean  v.  Bresley's  Administrator, 

544 
McLean  v.  Lafayette  Bank,  94,  508 
McMahon  v.  McClernan,  473 
McNab  v.  Noonan,  472 
McNeil  v.  Garrett,  138 
Mead  v.  Orrery,  96,  100 
Meaden  v.  Sealey,  93,  541 
Meadow     Valley    Mining    Co.    v. 

Dodds,  27 
Meara's  Administrator  v.  Holbrook, 

209,  345,  346 
Mechanics  Bank  of  Philadelphia  v. 

Bank  of  New  Brunswick,  666 
Meier  v.  Kansas  Pacific  R.  Co.,  2, 

304 
Melendy  v.  Barbour,  205,  208,  213, 

347 
Mercantile  Insurance  Co.  v.  Jaynes, 

179 
.Mercantile  Trust  Co.    v.  Lamoille 
*   Valley  R.  Co.,  56 
Merchants  Insurance  Co.,  In  re,  4, 

53,  55,  110 
Merchants  and  Manufacturers  Na- 
tional Bank  v.  Kemp,  18,  65,  549 
Meifefiant-s  afed;  Planters1 '  'National 

Bank  v.  Trustee*,  47 
Meredith  Village  SavirrgsrBftidrr. 

^itapsonv'SboV^. 
Meriwether  v.  Garrett,  30^ -379' - 
Merrcll  r.  pVirfrjcrton,  S9|  M 
Merrill  v.  Elam,  75,  88 

Metcalfe  v.  Pulvertoft^,'^  |,  B23 
Metzr.  i:.,C.  &P:R.C-,.,v 


ARE   TO  PAGES.] 

Metzner  v.  Bauer,  190,  193.  194 
Meyer  v.  Johnston,  299,  324,  357, 

359 
Meyer  v.  Seebold,  507 
Miami  Exporting  Co.  v.  Gano,  176 
Middleton  v.  Dodswell,  84,  387,  596, 

598,  599 
Middleton  v.  New  Jersey  West  Line 

R.  Co.,  323 
Milbank  v.  Revett,  514,  516 
Miller  v.  Jones,   71,   120,  463,  404, 

465,  471,  641 
Miller  v.  Loeb,  205,  214,  696 
Miller  v.  Mackenzie,  407 
Miller  r.  Shriner,  92 
Mills  v.  Fry,  532 
Miltenberger  v.  Logansport  R.  Co., 

324,  331,  332,  336,  337,  340,  581 
Milwaukee  &  Minnesota  R.  Co.  v. 

Soutter,  299,  322,  557,  077,  694 
Milwaukee  &  St.   Paul  R.  Co.  v. 

Milwaukee  &  Minnesota  R.  Co.,  56 
Mitchell,  Ex  parte,  359 
Mitchell  v.  Barnes,  492 
M'Loughlin  v.  Longan,  530 
Moak  v.  Coats,  407 
Moat  v.  Holbein,  136 
Mobile  &  Ohio  R.  Co.  v.  Davis,  355 
Moies  v.  O'Neil,  440 
Moise  v.  Chapman,  199,  245 
Monitor  Furnace  Co.  v.  Peters,  280 
Montgomery,  In  re,  676 
Montgomery  v.  Merrill,    239,   512, 

513,  548 
Mooney  v.  British  Commercial  Life 

Insurance  Co.,  151 
I  Moore  v.  O'Loghlin,  179 
!  Moran  v.  Schaffer.  325 
Monlmmi  r.  tfoimer.  l0,  IS4 
Miiitv  v.  GranL  3B2 
Morford  v.  flamner,  520 


I  Morgan  u.  Hardee,  p$8 

j  MorgaW  Nyw'York  &  All  urn  v  R. 


Co.,  281,  627 
Morgan  u.Ppfter;  98,  1S4 
MorMyf  Kent,  171 


iv-'ePi 


XXIV 


TABLE    OF    CASES    CITED. 


[references  are  to  pages.] 


Morris  v.  Branchaud,  564 
Morrison  v.  Buckner,  9,  12,  540,  541 
Morrison  v.  Sinister,  376 
Moseby  v.  Burrow,  198,  239 
Mott  v.  Dunn,  379,  632 
Mount  fort.  Ex 'parte,  74 
Mullen  v.  Jennings,  11,  619 
Muller  v.  Pondir,  652 
Municipal  Commissioners  of  Car- 

rickfergus  v.   Loekhart,    16,  19, 

482,  486,  643 
Munns  v.  Isle  of  Wight  R.  Co.,  301 
Murdock's  Case,  616,  618 
Murray  v.  Vanderbilt,  242,  243 
Murrough  v.  French,  399 
Musgrove  v.  Nash,  668 
Mutual  Life  Insurance  Co.  v.  Spicer, 

572 
Myer  v.  Car  Co.,  339 
Myers  v.  Estell,  6,  563 
Myton  v.  Davenport,  585 

N". 

Naglee  v.  Minturn,  447,  475 
Nason  v.  Blennerhassett,  533 
Nathan  v.  Whitlock,  176 
National  Bank  v.  Colby,  296 
National  Bank  of  the  Metropolis  ?\ 

Sprague,  159 
National    Mechanics  Banking  As- 
sociation v.   Mariposa  Co.,   368, 
369,  695 
National  Trust  Co.  v.  Miller,  195 
National  Trust  Co.  v.  Murphy,  179 
Neall  v.  Hill,  228,  627 
Neate  v.  Pink,  538 
Nelson  v.  Conner,  44 
Nesbitt  v.  Turrentine,  488 
New  v.  Wright,  429,  437,  445,  639 
New  Amsterdam  Fire    Insurance 

Co.,  In  re,  275 
Newbold  v.  P.  &  S.  R.  Co.,  360 
Newell  v.  Fisher,  181 
Newell  v.  Schnull,  93 
Newman  v.  Hammond,  39,  100 


Newman  v.  Mills,  151 

Newman  v.  Newman,  550,  554 

New  Orleans  Gas  Light  Co.  v.  Ben- 
nett, 251,  261 

Newport  v.  Bury,  70,  593.  611,  648 

Newport  &  Cincinnati  Bridge  Co. 
v.  Douglas,  339 

Newton  v.  Ricketts,  593 

Nichols  v.  Perry  Patent  Ann  Co., 
281,  627 

Nichols  v.  Smith,  345 

Nicoll  v.  Boyd,  426 

N.  J.  &  N.  Y.  R.  Co.,  In  re,  326 

Noad  v.  Backhouse,  594 

Noe  v.  Gibson,  134,  135 

Noonan  v.  McNab,  474 

North  American  Gutta  Percha  Co. , 
In  re,  113,  114 

North  Carolina  R.  Co.  v.  Drew,  341 

North  Carolina  R.  Co.  v.  Wilson, 
591 

Northwestern  Mutual  Life  Insur- 
ance Co.  v.  Park  Hotel  Co.,  561 

Norwood,  Ex  parte,  195 

Noyes  v.  Rich,  312,  329 

Nugent  v.  Nugent,  533 

Nusbaum  v.  Stein,  90,  91,  376,  377, 
631 

Nutting  v,  Colt,  432,  433,  636 

o. 

Oakley  v.  Paterson  Bank,  17,  77, 
229,230,  231,  281,  621,  627 

O'Brien  v.  Chicago,  Rock  Island  & 
Pacific  R.  Co.,  235 

O'Callaghan  v.  O'Callaghan,  531 

O'Connor  v.  Malone,  149 

Ogden  v.  Gregg,  469 

Ohio  &  Mississippi  R.  Co.  v.  Ander- 
son, 349 

Ohio  &  Mississippi  R.  Co.  v.  Davis, 
345,  349 

Ohio  &  Mississippi  R.  Co.  v.  Fitch, 
58,  350,  352 

Ohio  Turnpike  Co.  v.  Howard,  148 


TABLE    OF    CASES    CITED. 


XXV 


[references 
O'Keeffe  v.  Armstrong,  102 
Olcott  v.  Heermans,  1~>2 
Oldham  v.  Bank,  563 
Olds  v.  Tucker,  208 
Oliver  v.  Decatur,  542 
Olney  v.  Tanner,  190,  407,  408,  414 
O'Mahoney  v.  Belmont,  14,  34,  35, 

44,  76,  133,  672,  686 
O.  &  M.  R.  Co.  v.  Nickless,  352 
Ormsby,  In  re,  657 
Orphan  Asylum  v.  McCartee,   12, 

587,  592 
Osborn  v.  Heyer,  2,  365,  366,  633 
Osborne  v.  Harvey,  75,  87 
Osgood  v.  Lay  tin,  251,  252,  258,  260, 

628 
Osgood  v,  Maguire,  204 
Osgood  v.  Ogden,  203,  258,  270 
Otis  v.  Gross,  220 
Overton  v.  M.  &  L.  R.  Co.,  299 
Owen  v.  Homan,  9,  10,  19,  20,  482, 

485,  616,  643 
Owen  v.  Smith,  240,  512. 


Pacific  Railroad  v.  Ketchum,  39 

Page  v.  Vankirk,  437 

Paige  v.  Smith,  206,  222,  345,  347, 

353 
Palen  v.  Bushnell,  182,  418,  423 
Pafen  v.  Johnson,  182 
Palmer  v.  Murray,  178 
Palmer  v.  Vaughan,  23,  24,  622 
Palmer  v.  Wright,  606 
Palys  v.  Jewett,  208,  347 
Panton  v.  Zebley,  141 
Paradise  v.  Farmers  and  Merchants 

Bank,  194 
Parker  v.  Browning,  121,  125,  140 
Parker  v.  Dunn,  149 
Parker  v.  Moore,  369,  371 
Parker  v.  Parker,  518 
Parkhurst  v.  Kinsman,  34 
Parkhurst  v.  Muir,  442 
Parkin  v.  Seddons,  41,  42,  482 


ARE  TO  PAGES.] 

Parkinson  v.  Trousdale,  26,  684 

Parks  v.  Sprinkle,  418, 419 

Parnily   v.  Tenth  Ward  Bank,  12, 
239,  620 

Parr  v.  Bell,  206,  209,  210,  624 

Patrick  v.  Eells,  212 

Payne  v.  Atterbury,  500,  501 

Payne  v.  Baxter,  88,  206 

Payne  v.  Hook,  425 

Payne  v.  Paddock,  620 

Peacock  v.  Peacock,  446 

Peacock  v.  Pittsburg  Locomotive 
and  Car  Works,  214 

Pearce  v.  Gamble,  469 

Pease  v.  Fletcher,  25 

Penn  v.  Whiteheads,  18,  396,  621 

Pentz  v.  Hawley,  261,  264,  628 

People  v.  Albany  &  Susquehanna 
R.  Co.,  86,  90,  233 

People  v.  Barnett,  305 

People  v.  Brooks,  223 

People  v.  Central  City  Bank,  128, 
144 

People  v.  Columbia  Car  Spring  Co. , 
667 

People  v.  Draper,  22,  622 

People  v.  Hurlburt,  407 

People  v.  Jones,  224 

People  v.  Knickerbocker  Life  In- 
surance Co.,  671 

People  v.  Mayor  of  New  York,  500 

People  V.  Mead,  367 

People  v.  Merchants  and  Mechan- 
ics Bank,  220 

People  v.  Norton,  94,  511 

People  v.  Rogers,  140 

People  v.  Security  Life  Insurance 
Co.,  152,  277,  671 

People  v.  Sturtevant,  136 

People  v.  Universal  Life  Insurance 

Co.,  218 
People  v.  Washington  Ice  Co.,  845, 

628 
Perry  v.  Oriental  Hotels  Co.,  62,  W, 

558 
Persse,  In  re,  206,  209,  210,  624 


XXVI 


TABLE  OF  CASES  CITED. 


[references 
Pfeltz  t>.  Pfeltz,  481,  643 
Phelin  v.  Ganebin,  127 
Phelps  v.  Foster,  376,  631 
Philadelphia  &  Reading  R.  Co.  v. 

Commonwealth,  305 
Phillips  v.  Atkinson,  462 
Phillips  v.  Eiland,  521 
Phillips  v.  Smoot,  112 
Phipps  v.  Bishop  of  Bath,  578 
Phoenix  Insurance  Co.  v.  New  York 

Wrought    Iron    Railroad    Chair 

Co.,  272 
Phoenix  Mutual  Life  Insurance  Co. 

v.  Grant,  86 
Phoenix      Warehousing      Co.      v. 

Badger,  262 
Pickersgill  v.  Myers,  251 
Pignolet  v.  Bushe,  518 
Pineke,  Ex  parte,  65,  614 
Pitcher  v.  Helliar,  610 
Pitt  v.  Snowden,  172,  531 
Piatt  v.  Archer,  53,  54,  55 
Piatt  v.  Beach,  296 
Piatt  v.  Beebe,  293 
Piatt  v.   Crawford,  188,  290,  291, 

293 
Poage  v.  Bell,  11,  619 
Pod  more  v.  Gunning,  494 
Poland  v.  Railroad  Co.,  343 
Pond  v.  F.  &  L.  R.  Co.,  228 
Ponder  v.  Tate,  565 
P(  msonby  v.  Ponsonby,  695 
Pontius,  In  re,  238 
J 'ope  v.  Pope,  532 
Popper  v.  Scheider,  432,  434,  637 
Portarlington  v.  Soulby,  622 
Porter  v.  Kingman,  208 
P« uter  v.  Lopes,  25 
Porter  v.  Williams,  407,  411,  412 
Porter  v.  Williams  &  Clark,  173 
Post  v.  Dorr,  36,  545,  546,  581 
Potter  v.  Bunnell,  214,  345 
Potter  v.  Merchants  Bank.  189 
Pott3  r.  Leighton,  669.  670 
Potts  v.  Warwick  and  Birmingham 

Cabial,3Sa.vigatioa  Co.,  391 


ARE  TO  PAGES.] 

Powell  v.  Allarton,  621 
Powell  v.  Quinn,  596 
Powell  v.  Waldron,  421.  423 
Powers  v.  Hamilton,  280 
Powers  v.  Loughridge,  221 
Poythress  v.  Poythress,  587,  589 
Pread  v.  Lewis,  533 
Prebble  v.  Boghurst,  511 
Preston  v.   Corporation    of    Great 

Yarmouth,  558 
Price  v.  Abbott,  296 
Price  v.  White,  655 
Price's  Executrix  v.  Price's  Execu- 
tors, 599 
Pringle  v.  Woolworth,  239,  255 
Pritchard  v.  Fleetwood,  506 
Probasco  v.  Probasco,  84,  499 
Pullan  v.  Cincinnati  &  Chicago  R. 

Co.,  5,  9,  311,  616 
Purcell  v.  Woodley,  678 

Q. 

Quin  v.  Holland,  535 

Quincy  r.  Cheeseman,  563,  570 

Quinn  v.  Brittain,  389,  575,  576 

R 

Radford  v.  Folsom,  660,  669,  674 
Railroad  v.  Keary,  346 
Railway  Co.  v.  Jewett,  91,  300 
Raincock  i\  Simpson.  531 
Randall  v.  Morrell.  454,  638 
Randfield  v.  Randfield,  205,  206 
Rankin  v.  Minor,  409 
Rankine  v.  Elliott,  261,  285,  629 
Ranney  v.  Peyser,  581,  582,  585 
Rawnsley  v.  Trenton  Mutual  Life  & 

Fire  Insurance  Co.,  17,  281,  621, 

627 
Ray  v.  Macomb,  179 
Read  v.  Corcoran.  674 
Real  Estate  Associates,  In  re,  32 
Real  Estate  Associates  v.  Superior 

Court,  74 


TABLE    OF    CASES    CITED. 


XXVll 


[referent-; 

Receiver  v.  First  National  Bank, 
107,  163 

Receiver  of  Adams  &Co.  v.  Roman, 
474 

Receivers  v.  Wortendyke,  343 

Reddall  v.  Bryan,  lilt! 

Redmond  v.  Hoge,  343 

Reid  v.  MLddleton,  529 

Reid  v.  Reid,  27 

Rendali  v.  RendaU,  596,  603 

Renick  v.  Bank  of  West  Union,  176 

Renton  v.  Chaplain,  453,  454,  638 

Rheinstein  v.  Bixby,  549 

Rhodes  v.  Cousins,  376 

Rhodes  v.  Lee,  26,  -112.  636 

Rice  v.  St.  Paul  &  Pacific  R.  Co., 
12,  313 

Rich  r.  Levy.  376,  377.  632 

Rich  v.  Loutrel,  113,  114 

Richards  v.  Allen,  416,  423 

Richards  v.  Cliavc,  41 

Richards  v.  Morris  Canal  &  Bank- 
in- Co.,  660 

Richards  v.  People,  127.  133,  138 

Richards  v.  West,  136 

Richardson  v.  Hickman,  143 

Riches  v.  Owen,  395 

Richey  v.  Gfleeson,  80 

Rid  iter  v.  Schroeder,  671 

Rider  v.  Bagley,  546 

Rider  v.  Vrooman,  546 

Ridout  v.  Earl  of  Plymouth,  97 

Rigge  v.  TV  water,  547 

Riggs  v.  Whitney,  115,  424 

Righton  v.  Pruden,  414,  415 

Robenaon  v.  Ross,  27 

Roberson  v.  Robei'son,  28 

Robert  v.  Tift,  59 1 

Roberts  v.  Anderson,  26,  684 

Roberts  v.  Bberhardt,  440,  450 

Robeson  v.  Ford,  122.  1  10 

Robinson  v.  Atlantic  &  Great  West- 
ern R.  C  ...  109,  116,  117 

Robinson  v.  Hadley,  75 

Rockwell  v.  Merwin,  186 

Rodman  v.  Henry,  !  I '. 


ARE  TO  PAGES.] 

Rogers  r.  Corning,  132,  422 

Rogers  v.  Dougherty,  90,  91 

Rogers  v.  Marshall,  500,  501,  045 

Rogers  v.  Newton,  559 

Rogers  v.  Odom.  66, 

Rollins  v.  Henry,  482,  500 

Root  v.  Safford,  399 

Rose  v.  Bevan,  389,  390,  833 

Rosenberg  v.   Mooi  ■.   '■'■'■'•■.  ">77,  373, 

631 
Rosenblatt  v.  Johnston,  290 
Ross  v.  Bridge,  686 
Ross  v.  Williams,  107 
Rowe  v.  Wood,  575,  570 
Ruggles  v.  Brocl  . 
Ruggles    v.    Southern     Minn 

Railroad,  299,  310,  559,  V  I,  563, 

629 
Runals  v.  Harding,  399 
Runk  v.  St.  John,  190, 193 
Runyon  v.    Farmers  &  Mechanics 

Bank  of  New  Brunswick.  3, 
Russell  v.  Baker.  539 
Russell  v.  East  Anglian  R.  Co..  114, 

119,  134,  137 
Rutherford  v.  Jcnes,  399 
Rutter  v.  Tallis,  112,  128 
Ryan  v.  Hays,  335,  355 
Ryan  v.  Lefroy,  581 
Ryckman  r.  Parkins,  179,  673 


s. 


Sacramento  &  P.  R.  Co.  v.  Superi  r 

Court,  313 
Safford  v.  People, 
Sage  v.  M.  &  L.  R,  Co.,  300 
Salway  v.  Salway,  219 
Sanders  r.  Lord  Lisle.  581,  5!  2,  i    j 
Sandford   r.   Ballard,  515,  51  , 
Sandford  v.  Clarke,  221,  648 
Sandford  v.  Sinclair,  90,  399 
Sands  v.  Hill,  269 
Sands  v.  Roberts,  403 
Sands  v.  Sanders,  264,  267,  2C9 
Sands  v.  Sweet,  261,  263 


xx  vm 


TABLE    OF    CASES    CITED. 


[references  are  to  pages.] 


Sankey  v.  O'Maley,  380 

Sargent  v.  Read,  470 

Savage  v.  Medbury,  199,  254,  266 

Saylor  v.  Mockbie,  428,  441,  638 

Scarborough  v.  Borman,  158 

Schenck  v.  Ingraharn,  679 

Schenk  v.  Peay,  132 

Schleckt's  Appeal,  77,  482,  495,  643 

Schmid  v.  N.  Y.,  L.  E.  &  W.  R. 

Co.,  355 
Schoeffler  v.  Schwarting,  684 
Schoonover  v.  Hinckley,  262 
Sclire:ber  v.  Carey,  87,  555,  556,  533 
Scott  v.  Duncombe,  188 
Scott  v.  Elmore,  407 
Scott  v.  Nevius,  422 
Scott  v.  Scott,  493 
Scott  v.  Searles,  39 
Scott  v.  Ware,  545 
Screven  v.  Clark,  170 
Seagram  v.  Tuck,  100 
Sea  Insurance  Co.  v.  Stebbins,  559, 

563,  564 
Sealy  v.  Munns,  538 
Searcy  v.  Stubbs,  178 
Searle  v.  Choate,  205 
Second  Ward    Bank  v.   Upmann, 

39,  369,  370 
Secor  v.  T.,  P.  &  W.  R.  Co.,  134, 

307 
Security  Bank  v.  National  Bank  of 

the  Commonwealth,  289,  296 
Security  Life  Insurance  &  Annuity 

Co.,  In  re,  648 
Sedgwick  v.  Menck,  47,  53,  54 
Sedgwick  v.  Place,  57 
Seibert  v.  Seibert,  460 
Seidenbach  v.  Denklespeil,  106 
Seighortner  v.    Weissenborn,   621, 

637 
Seymour  v.  Wilson,  412 
Shainwald  v.  Lewis,  180,  381,  382, 

682 
Shand  v.  Hanley,  382,  394 
Shannon  r.  Wright,  438,  461 
Sharp  v.  Carter,  110,  111 


Shaughnessy  v.  The  Rensselaer  In- 
surance Co.,   199,  251,  254,  264, 
266,  267 
Shaw  v.  Rhodes,  669,  670 
Shaw  v.  Shore,  40,  549 
Shee  v.  Harris,  87,  506 
Sheeks  v.  Klotz,  556 
Shehan  v.  Mohar,  21 
Sheldon  v.  Adams,  177 
Sheldon  v.  Weeks,  79 
Shelly  v.  Pelham,  531 
Sheppard  v.  Oxenford,  40,  446,  622, 

639 
Sherman  v.  Clark,  11,  619 
Shewell  v.  Jones,  666 
Shoemaker  v.  Smith,  440 
Shotwell  v.  Smith,  544 
Shreve  v.  Hankinson,  546 
Shulte  v.  Hoffman,  87,  99,  457 
Silver  v.  Bishop  of  Norwich,  508, 

578 
Silverman  v.  Kuhn,  390 
Silverman  v.  Northwestern  Mutual 

Life  Insurance  Company,  547 
Simmons  v.  Henderson,  26,  607 
Simmons  v.  Wood,  86,  91,  160 
Simon  v.  Schloss,  441 
Simpson  v.  Robert,  547 
Siney  v.  New  York  Consolidated 

Stage  Co.,  681,  683 
Singerly  v.  Fox,  175,  204 
Skiddy  v.  A.,  M.  &  O.  R.  Co.,  338, 

339 
Skinner  v.  Maxwell,  3,   11,  25,  109, 

115,  116,  611 
Skinners  Company  v.  Irish  Society, 

9,  15,  16,  482,  486,  618,  620,  643 
Skip  v.  Harwood,  129, 134, 138, 139, 

474 
Slade  v.  Van  Vechten,  157 
Slemmers  Appeal,  455 
Sloan  v.  Central  Iowa  R.  Co.,  345, 

354 
Smith,  Ex  parte,  39 
Smith  v.  Butcher,  74,  389 
Smith  v.  Cowell,  25 


TABLE    OF    CASES    CITED. 


XXIX 


[references  are  to  pages.] 
Smith  v.  Earl  of  Effingham,  213       I  State  v.  Gibson,  10S 


Smith  v.  Jeyes,  439,  451,  452,  637 

Smith  v.  Kelley,  521 

Smith  v.  Lowe,  442 

Smith  v.  Lyster,  612,  690 

Smith  v.  Manhattan  Insurance  Co., 
283 

Smith  v.  McNamara,  127 

Smith  v.  Moseby,  201 

Smith  v.  New  York  Consolidated 
Stage  Co.,  62,  151,  152,  180 

Smith  v.  Smith,  603 

Smith  v.  Thompson,  369,  373 

Smith  v.  Tiffany,  555 

Smith  v.  Trenton   Delaware  Falls 
Co.,  212 

Smith  v.  Vanghan,  693 

Smith  v.  Wells,  14,  233 

Smith  v.  Woodruff,  418 

Snow  v.  Winslow,  361 

Sollory  v.  Leaver,  12,  499,  620 

Sorley  v.  Brewer,  380,  032 

South  Carolina  R.  Co.  v.   People's 
Saving  Institution,  47 

Southern    Bank    of    Kentucky    v. 
Ohio  Insurance  Co.,  239 

Southern  Railway  Co. ,  In  re,  303 
Special     Bank    Commissioners    v. 
Franklin  Institution,  648,  651,  671 
Speights  v.  Peters,  4,  12,  430,  460 
Spencer  v.  Cuyler,  367,  373,  374 
Spinning  v.  Ohio  Life  Insurance  & 
Trust  Co.,  47,  49,  52,  115,  134,  136 
Spring  v.  Strauss,  417 
Slairley  v.  Rabe,  596,  598,  599,  609 
Stanger  Leathes  v.  Stanger  Leatlu  ss, 

25,  591 
Stannus  v.  French,  158 
Stanton  v.  A.  &  C.  R.  Co.,  358,  359 
Stark  v.  Burke,  251,  261,  278,  279 
Starr  v.  Rathbone,  369,  371 
State  v.  A.  &  G.  R.  Co.,  305 
State  v.  Allen,  490 
State  v.  Claypool,  249,  685 
Stater.  E.  &  K.  R.  Co.,  323 
State  v.  Fichtenkamm,  177 


State  v.  Johnson,  32,  153 

State  v.  M.  &  C.  R.  Co.,  308 

State  v.  McM.  cS:  M.  R.  Co.,  323 

State  v.  Merchant,  305 

State  v.  Northern  Central  R.  Co.,  40 

State  v.  Rivers,  110 

State  Bank  v.  Gill,  368 

State  Bank  v.  Receivers  of  Bank  of 
New  Brunswick,  200 

State    of    Maryland    v.    Northern 
Central  R.  Co.,  317 

Steele  v.  Cobham,  596,  601 

Steele  v.  Sturges,  112,  128 

SteLzer  v.  La  Rose,  469,  536 

Stenhouse  v.  Davis,  607 

Stevens  v.  Davidson,  299,  301 

Stevens  v.  Myers,  684 

Steward  v.  Green,  394 

Steward  v.  Stevens,  369,  373,  374 

Stewart  v.  Beebe,  185,  186 
Stewart    v.    Chesapeake    &    Ohio 

Canal  Co.,  245 
Stewart  v.  Lay,  262 
Stillman  v.  Dougherty,  261,  263 
St  dwell  v.  Wilkins,  491,  492 
Stitwell  v.  Williams,  491,  492 
St.  John  v.  Denison,  184 
St.  Joseph  &  Denver  City  R.  Co.  v. 

Smith,  206,  207,  347 
Stone  v.  Wetmore,  22,  23,  622 
Stone  v.  Wishart,  65,  70,  611 
Stoors  v.  Kelsey,  371 
Storm  y.  Ermantrout,  573 
Storm  v.  Wadded,  47,  49,  50,  404 
Story  v.  Furman,  254 
Strang  v.  M.  &  E.  R.  Co.,  341 
Stratton  v.  Davidson,  95 
Street!'.  Anderton,  515,  516,  646 
Streit  V.    Citizens    Fire    Insurance 

Co.,  235 
Stretch  v.  Gowdey,  648,  60S 
Strong  v.  Goldman,  382 
Strong  w.  Southwortb,  292 
Stvxrch  r.  Young,  512 
Sturgeon  r.  Douglas,  531 


XXX 


TABLE    OF    CASE3    CITED. 


[references 
V.  Knapp,  111 
Stuyvesant  Bank,  In  re,  71 
Suffern  v.  Butler,  684 
.Sullivan  v.  Judah,  136 
Supervisors  v.  Rogers.  372 
Sutherland  v.  Lake  Superior  Ship 

Canal  R.  &  I.  Co.,  550 
Sutro  v.  Wagner,  439,  440,  637 
Sutton  v.  Jones,  69,  593 
Suydani  v.  Dequindre,  383 
Suydara  v.  Receivers  of  Bank  of 

•\-  Brunswick,  271 
Swaby  v.  Dickon,  076 
S'wannv.  Clark,  358,  361 
Swann  v.  Wright's  Ex'r,  361 
Sweet  y.  Partridge,  388 
Swing  v.  Townsend,  32 

:  v.  Hastings,  65,  69,  70,  593, 

611 
Sylvester  v.  Reed,  395,  605 
Syme  v.  Bunting,  107 


Tait  v.  Jenkins,  610 

Talbot  v.  Hope  Scott,  479,  480,  482, 
483 

Talmage  v.  Pell,  177,  249 

Tanfield  v.  Irvine,  577,  579,  584 

Tapp  v.  Rankin,  650 

Tappan  v.  Gray,  22,  622 

Taylor  v.  Allen,  172 

Taylor  v.  Baldwin,  205,  206 

Taylor  v.  Columbia  Insurance  Co. , 
42,  192,  193 

Taylor  v.  Dickinson,  684 

Taylor  v.  Emerson,  381,  503 

Taylor  v.  Gillean,  127 

Taylor  v.  Life  Association  of  Amer- 
ica, 65,  100 

Taylor  v.  P.  &  R.  R.  Co.,  308,  336, 
340,  357,  358 

Taylor  v.  Sweet,  146 

Teller  v.  Randall,  417 

Tempest  v.  Ord,  684 

Temple  v.  Williams,  609 


?.Z  TO  PAGES.] 

Terrell  v.  Goddard,  437 
Terrell  v.  Ingersoll,  216 
Terry  v.  Bamberger,  175,  252 
Tharpe  v.  Tharpe,  60,  61,  64 
Thayer  v.  Swift,  369,  373 
Thomas  v.  Brigstocke,  557,  693 
Thomas  v.  Davies,   87,  88,  554,  555 
Thomas  v.  Dawkin,  60,  61 
Thomas  v.  Thomas,  532 
Thomas  v.  Whallon,  165,  199,  255. 

264,  265,  267,  268 
Thompsen  v.  Diffenderfer,  26,  376, 

378,  631 
Thompson  v,  Allen  County,  372 
Thompson  v.  Scott,  205,  206 
Thompson  v.  Selby,  80 
Thompson  v.  Sherrard,  500 
Thomson  r.  MacGregor,  164 
Thornhill  r.  Thornhill,  148 
Thornton   v.   Wasliington   Savings 

Bank,  121 
Thurman  v.  Cherokee  R.  Co.,  345 
Tillinghast  v.  Champlin,  465,  468 
Tillotson  v.  Wolcott,  403,  404 
Tink  v.  Rundle,  116,  206,  209,  210, 

623,  624 
Tinkham  v.  Borst,  181 
Tippecanoe  Townshii?  v.  Manlove, 

265 
Titherington's  Adm'r  v.  Hodge,  156 
Tobey  v.  Russell,  261 
Todd  v.  Crooke,  384 
Todd  v.  Lee,  380,  633 
Todd  v.  Rich,  439,  470,  658 
Toledo,  W.  &  W.  R.  Co.  v.  B- 

179 
Tonilinson  v.  Ward,  18,  98,  440 
Tracy  v.   First  National    Bank   of 

Selma,  211 
Travelers  Insurance  Co.  v.  Brouse, 

556 
Tredennick  v.  Graydon,  387 
Tregaskis    v.    Judge   of    Su])erior 

Court,  5 
Trenton  Banking  Co.  v.  Woodruff, 
575,  576 


TABLE    OF    CASES    CITED. 


XXXI 


[references  a 
Tressilian  v.  Caniffe,  560 
Triebert  v.  Burgess,  90,  91 
Tripp  v.  Boardman,  131 
Truman  v.  Redgrave,  548 
Try  v.  Try,  117 

Trye  v.  Earl  of  Aldborough,  560 
Tuckerman  v.  Brown,  256 
Tufts  v.  Little,  523 
Turner  v.  Hannibal  &  St.  Joseph 

R.  Co.,  349 
Turner  v.  I.,  B.  &  W.  R.  Co.,  333, 

335,  336,  341 
Turner  v.  P.  &  S.  R.  Co.,  358,  359 
Twitty  v.  Logan,  4S2 
Tylee  v.  Tylee,  97 
Tyler  v.  Whitney,  373,  374,  423 
Tyler  v.  Willis,  373,  374,  423 
Tysen  v.  Wabash  R.  Co.,  311.  312 
Tyson  v.  Fairclough,  515,  518 

u. 

Uhl  v.  Dillon,  376,  631 
Underwood  v.  Suteliffe,  413 
Union  Bank  Case,  331,  648 
Union  Trust  Co.  v.  C.  &  L.  H.  R. 

Co.,  359,  360 
Union  Trust  Co.  v.  Souther,  335, 

339 
Union  Trust  Co.  v.  St.  L.,  I.  M.  & 

S.  R.  Co.,  312 
Union  Trust  Co.  v.  The  Rockford, 

Rock  Island  &  St.  Louis  R.  Co. , 

46,  47,  56,  319,  321 
Union  Trust  Co.  v.  Walker,  339 
Union  Trust  Co.  v.  Weber,  114 
United  States  v.  Duluth,  616 
United  States  Trust  Co.   of  New 

York  V,  Harris,  202 
Utica  Insurance  Co.  v.  Lynch,  668, 

673 

V. 

Vail  v.  Hamilton,  257 

Vail  v.  Knapp,  622 

Van  Allen,  In  re,  151,  270 


1U  TO  PAGES.] 

Van  Alstyne  v.  Cook,  102,  444 
Van  Antwerp  v.  Hulburd,  290 
VanBuren    v.   Chenango    County 

Mutual  Insurance  Co.,  657 
Van  Dusen  v.  Worrell,  183 
Van  Dyck  v.  McQuade,  201 
Van  Epps  v.  Van  Epps,  157 
Van  Rensselaer  v.  Emery,  3,  3,  153, 

468,  638,  641 
Van  Wagenen  v.  Clark.  261 
Van    Wagoner    r.    Paterson    Gas 

Light  Co.,  199,  200,  201 
Vann  v.  Barnett,  S3,  84,  85,  492 
Vaughan  v.  Vaughan,  99 
Vaughan  v.  Vincent,  514 
Vause  v.  Woods,  386,  482,  483 
Veret  v.  Duprez,  42 
Vermont  t\:  Canada  R.  Co.  v.  Ver- 
mont Central  R.    Co.,   115.    131. 
165,  323,  329,  623,  630 
Verplanck  v.  Mercantile  Insurance 

Co.,  90,  92,  659 
Very  v.  Watkins,  132 
Vincent  V.  Parker,  123 
Visage  v.  Schofield,  690 
Vose  v.  Reed,  10,  11,  13,  589 
Voshell  v.  Hynson,  26,  191,  684 
Van  Roun  v.  Superior  Court,  113 

AV. 

Wabash,   St.   L.   &   P.   R.   Co.   v. 

Central  Trust  Co.,  800 
Wachtel  v.  Wilde,  376 
Wagar  v.  Stone,  544 
Walker,  Ex  parte,  8,  604,  617 
Walker  v.  Drew,  386,  607 
Walker  v.  House,  463,  463,  610 
Walker  v.  Morris,  538 
Wall  Street  Fire  Insurance  Co.  v. 

Loud,  568,  569 
Wallace  v.  Loomis,  357,  358,  359 
Wallace  v.  Yeager,  469 
Walsh  v.  Walsh,  535 
Ward  v.  Swift,  139,  143 
Wardell  v.  Leavenworth,  396 


XXX11 


TABLE    OF    CASES    CITED. 


[references  . 

Ware  v.  Ware,  COT 

Waring  v.  Robinson,  444 

Warner  v.  Gouverneurs  Ex'rs,  563, 

564 
Warner  v.  Rising  Fawn  Iron  Co., 

543 
Warren  v.  Sprague,  180 
Warren  v.  Union  National  Bank, 

190,  192 
Warwick  v.  Hammell,  585 
Washer  v.  Brown,  26,  684 
Washington  Life  Insurance  Co.  v. 

Fleischauer,  581,  691 
Waterbury    v.    Merchants     Union 

Express  Co.,  228,  229,  COT 
Waters  v.  Carroll.  2,  66 
Waters  v.  Taylor,  35 
Watkins  v.  Brent,  41 
Watkins  v.  Pinkney.  4T,  49,  50 
Watson  v.  Arundel,  65 
Webb  v.  Overrnann,  398 
Webbu  VanZandt,  SOT 
Webster  v.  Couch,  11,  619 
Weed  v.  Smull,  408 
Weems  v.  Lathrop,  11,  104 

.'•■'    ■  v.  Welsh,  518 
Welch  v.  Henry,  549 
Welh nan  v.  Harker,  445 
West  V.  Chasten,  81,  443 
West  v.  Swan,  85,  86 
W    it  V.  Weaver,  38 
Western  Union  Telegraph    Co.  v. 

Atlantic  &  Pacific  Telegraph  Co., 

304 
W<  iter  v.  Schlieper,  682 
Wheeler  v.  Chnton  Canal  Bank,  231 
Whelpley  v.  Erie  Railway  Co.,  9, 

10,  303,  616 
White  v.  Baugh,  219 
White  v.  Bishop  of  Peterborough, 

508 
White  v.  Colfax,  439,  441 
White  v.  Griggs,  5T0 
White  v.  Haight,  251,  252 
White  r.  Lord  Westrneath,  82,  677, 


'.E   TO   PAGES.] 

White  r.  Low,  185,  186 
Whitehead  v.  Wooten,  4,  84,  85,  90,- 

93,  5C8 
White  law  v.  Sandys,  503 
Whitely  r.  Lowe,  150 
Whiteside  v.  Prendergast,  99,  689 
Whitesides  v.  Lafferty,  4T0 
White  Water  Valley  Canal  Co.  v. 

Vallette,  5T2 
Whitfield,  Ex  parte,  610 
Whitman  v.  Robinson,  438,  637 
Whitney  v.  Buckman,  81,  501,  502, 

513,  621 
Whitney  v.  N.  Y.  &  A.  R.  Co.,  310 
Whittlesey  v.  Frantz,  424 
Whi t  worth  v.  Whyddon,  11,  41 
Wickens  v.  Townsliend,  98 
Wiggins  V.  Armstrong,  3T6,  3TT,  631 
Wildridge  v.  McKane,  6T8 
Wiles  v.  Cooper,  509 
Wilkenson  v.  Dobbie,  10 
Wilkins  v.  Williams,  60 
Williams  v.  Babcock,  165,  199,  254, 

255.  264 
Williams  v.  Green,  509,  64G 
Williams    v.  Hogeboom,    3T3,   374, 

375 
Williams  v.  Hubbai-d,  3T3 
Williams  v.  Jenkins,  84,  94,  515,  646 
Williams  v.  Robinson,  544 
Williams  v.  Traphagen,  202 
Williams  v.  Wilson,  4T3 
Williamson  v.  Gerlach,  583 
Williamson  r.  Monroe,  442 
Williamson  v.  New  Albany  R.  Co., 

311,  312 
Williamson  v.  Wilson,  2,  3,  62.  64, 

439,  447,  63T,  640,  641,  682 
Williamson's  Adin'r  v.  W.  C,  V.  M. 

&G.  S.  R.  Co.,  9,  333 
Willink  v.  Morris  Canal  aud  Bank- 
ing Co.,  212,  384 
Willis  r.  Corlies,  482,  489,  643 
Willitts  v.  Waite,  42.  43.  192 
Wilmer  v.  A.  &  R.  A.  L.  R.  Co., 

313,  321 


TABLE    OF    CASES    CITED. 


XXX  ,.1 


Wilmington    Star 

Allen,  280 
'Wilson  v.  Allen.  173,  404,  403 
Wilson  v.  Barney,  G81 
Wilson  v.  Davis,  27 
Wilson  v.  Fitchter,  453 
Wilson  v.  Greonwocd,  458,  4G0 
Wilson  v.  Poe,  04 

Wilson  v.  Wilson,  172,  811,  401,500 
Wincock  r.  Turpin,  253 
Winfield  v.  Bacon.  213,  023,  077 
Wing  v.  Disse,  407 
Winkler  v.  Winkler,  11,  019 
Winthrop  Iron 'Co.  v.  Meeker,  31 
Wise  v.  Ashe,  99,  505 
Wis  wall  v.  Sampson,  117,  391 
Wolbert  v.  Harris,  433,  430,  453,  458 
Wood  v.  Brewer,  27 
Wood  v.  Gaynon,  535 
Wood  v.  Hitchings,  003,  004 
Wood  v.  Sutcliffe,  020 
Wood  v.  Wood,  225 
Wooden  v.  Wooden,  11,  019 
Woodruff  v.  Erie  E.  Co.,  332,  349 
Woodward  v.  Eayi  of  Lincoln,  130 
c 


[references  are  to  pages.] 
initio    Co.    v.  I  Woodward  v.  Ellsworth.  297 
Woodyatt  v.  Gresley,  83,  512 
Wool  ley  v.  Holt,  540 
Warrillr.  Coker,  522 
Woven  Tape  Skirt  Co.,  In  re,  144. 

050 
Wray  v.  Hazlett,  205 
Wray  v.  Jamison,  171,  174 
Wren  v.  Kirton,  218 
Wright    v.      Merchants    National 

Bank,  29:'..  395 
Wright  v.  Nostrand,  413,  418 
Wright  v.  Vernon,  87,  88 
Wrixon  v.  Vize,  149,  130 
Wyatt  v.  O.  &  M.  R.  Co..  350 
Wynne  v.  Lord  Newborough,  00, 02, 

64,  66,  109,  511,  646 


Yeager  V.  Wallace.  171,  172 
Young,  In  re,  210,  212 
Young  v.  Frier,  370,  531 
Young  v.  M.  &  E.  R.  Co.,  44 
Young  v.  Rollins,  44,  235,  246 


THE  LAW  OF  RECEIVERS. 


CHAPTER  I. 

OF  THE  GENERAL  FEATURES  OF  THE  JURISDICTION. 

§  1.  A  receiver  defined. 

2.  An  executive  officer ;  compared  -with  sheriff. 

3.  The  jurisdiction  a  preventive  one ;  cautiously  exercised. 

4.  Beneficial  nature  of  the  relief ;  possession  of  the  receiver  that  of 

tbe  court. 

5.  The  remedy  a  sequestration ;  title  not  changed. 

G.     Remedy  a  provisional  one;  not  decisive  of  ultimate  right,  nor 
conclusive  of  merits. 

7.  Discretionary  nature  of  the  power. 

8.  Probability  as  to  final  decree. 

9.  When  power  may  be  invoked;  not  when  property  is  of  little 

value. 

10.  Relief  similar  to  tbat  by  injunction;  net  granted  when  there  is  a 

remedy  at  law. 

11.  Plaintiff  must  show  his  own  right,  and  danger  to  the  property. 

12.  Plaintiff  must  have  existing  interest ;  relief  not  granted  to  stranger. 

13.  Receiver  not  allowed  for  benefit  of  stranger  to  the  cause. 

14.  Diligence  necessary ;  laches  and  acquiescence  a  bar  to  relief . 
13.     The  remedy  compared  with  that  by  injunction. 

16.  Receiver  not  necessarily  appointed  because  injunction  granted. 

17.  Suit  must  be  actually  pending ;  allegations  must  be  specific. 

18.  Insolvency  as  a  ground  for  relief. 

19.  Courts  averse  to  interfering  with  defendant  in  possession;  consid- 

erations governing  the  discretion. 

20.  Averse  to  interference  with  tenants  in  common  of  personalty. 

21.  The  jurisdiction  not  extended  to  conflict  as  to  public  offices. 

22.  Receiver  may  be  appointed  over  fees  and  emoluments  of  an  office. 

23.  The  jurisdiction  as  affected  by  codes  of  procedure ;  Supreme  Court 

of  Judicature  Act  in  England. 

24.  Receiver  not  granted  when  equities  of  bill  are  denied  by  answer. 

1 


2  KECEIVEKS.  [CHAP.  I. 

§  25.    Conflict  of  authority  as  to  whether  appeal  will  lie. 

26.  Appeal  not  allowed  in  certain  states. 

27.  The  question  dependent  upon  whether  the  order  affects  a  substan- 

tial right. 
27a.  Decree  appealable  if  right  finally  determined. 

28.  Reversal  by  certiorari. 

29.  Effect  of  appeal  on  functions  of  receiver. 

30.  Same  relief  sought  in  different  suits. 

31.  Test  as  to  defendant's  interest;  receiver  over  a  pension. 

32.  Not  granted  where  court  can  not  control  property ;  license ;  rates 

and  taxes. 

33.  Relief  refused  as  against  innocent  purchasers. 

34.  Peril  to  the  fund ;  infringement  of  patent. 

35.  Receiver  not  granted  to  compel  payment  of  money ;  subscriptions 

to  a  fund. 

36.  Management  of  business  by  a  receiver. 

37.  Effect  of  acquiescence  in  appointment. 

38.  Receiver  held  to  strict  accountability. 

39.  Statute  authorizing  appointment  by  governor. 

§  1.  A  receiver  is  an  indifferent  person  between  the  par- 
ties to  a  cause,  appointed  by  the  court  to  receive  and  pre- 
serve the  property  or  fund  in  litigation  pendente  lite,  when 
it  does  not  seem  reasonable  to  the  court  that  either  party 
should  hold  it.1  He  is  not  the  agent  or  representative  of 
either  party  to  the  action,  but  is  uniformly  regarded  as  an 
officer  of  the  court,  exercising  his  functions  in  the  interest 
of  neither  plaintiff  nor  defendant,  but  for  the  common  ben- 
efit of  all  parties  in  interest.2    Being  an  officer  of  the  court, 

i  Booth  v.  Clark,  17  How.,  322;  Pr.,   274;  Brown  v.  Northrop,   15 

Waters  v.   Carroll,   9  Yerg.,  102;  Ab.  Pr.,  N.  S.,  333;  Corey  v.  Long, 

Baker  v.  Administrator  of  Backus,  43  How.  Pr.,  497 ;  S.  C,  12  Ab.  Pr., 

32  111.,  79;  Devendorf  v.  Dickinson,  N.  S.,  427;  Williamson  v.  Wilson, 

21  How.  Pr.,  275.  1  Bland,  418;  EUicott  v.  Warford, 

2  Davis  v.  Duke  of  Marlborough,  4    Md.,    80;    Van   Rensselaer    v. 

2  Swans.,  108;  Booth  v.  Clark,  17  Emery,  9  How.  Pr.,  135;  Meier  v. 

How.,  322;  Hooper  v.  Winston,  24  Kansas  Pacific  R.  Co.,  5  Dill.,  476. 

111.,  353;   Baker  v.  Administrator  But  in  Louisiana  it  is  held  that  a 

of  Backus,   32  HI.,   79;  Kaiser  v.  receiver  of  partnership  funds,  ap- 

Kellar,  21  Iowa,  95 ;  King  v.  Cutts,  pointed  by  consent  of  both  partners, 

24  Wis.,  627;  Osborn  v.  Heyer,  2  pending  a  suit  for  the  dissolution 

Paige,  342 ;  Curtis  v.  Leavitt,  1  Ab.  of  the  firm,  is  not  an  officer  of  the 


CHAP.  I.] 


GENERAL   FEATURES. 


the  fund  or  property  entrusted  to  his  care  is  regarded  as 
being  in  custodia  legis,  for  the  benefit  of  whoever  may  event- 
ually establish  title  thereto,  the  court  itself  having  the  care 
of  the  property  by  its  receiver,  who  is  merely  its  creature 
or  officer,  having  no  powers  other  than  those  conferred  upon 
him  by  the  order  of  his  appointment,  or  such  as  are  derived 
from  the  established  practice  of  courts  of  equity.1 

§  2.  A  receiver  is  frequently  spoken  of  as  the  "  hand  of 
the  court,"  and  the  expression  very  aptly  designates  his 
functions,  as  well  as  the  relation  which  he  sustains  to  the 
court.2  He  is  regarded  as  the  executive  officer  of  a  court 
of  chancery  in  much  the  same  sense  that  a  sheriff  is  the  ex- 
ecutive officer  of  a  court  of  law,  and  the  assets  and  property 
in  his  hands  are  as  much  in  the  custody  of  the  law  as  if 
levied  upon  under  an  execution  or  attachment.  Indeed,  the 
purpose  for  which  a  receiver  takes  possession  is  closely 
allied  to  that  of  a  sheriff  in  levying  under  execution,  except 


court,  but  merely  an  agent  of  the 
parties,  and  that  the  principles  gov- 
erning receivers  generally  are  inap- 
plicable to  such  a  case.  Kellar  v. 
Williams,  3  Rob.  (La.),  321. 

"Booth  v.  Clark,  17  How.,  322; 
Hunt  v.  Wolfe,  2  Daly,  303 ;  Deven- 
dorf  v.  Dickinson,  21  How.  Pr., 
275;  Corey  v.  Long,  43  How.  Pr., 
497;  S.  C,  12  Ab.  Pr.,  N.  S.,  427; 
Skinner  v.  Maxwell,  66  N.  C,  45, 
and  see  S.  C,  68  N.  C,  400;  Battle 
v.  Davis,  66  N.  C,  252;  Hooper  v. 
Winston,  24  111.,  353;  Kaiser  v. 
Kellar,  21  Iowa,  95;  Ellicott  v. 
Warford,  4  Md.,  80;  Coburn  v. 
Ames,  57  Cal.,  201. 

2  See  Runyon  v.  Farmers'  &  Me- 
chanics' Bank  of  New  Brunswick, 
3  Green  Ch.,  480;  Van  Rensselaer 
v.  Emery,  9  How.  Pr.,  135;  Will- 
iamson v.  Wilson,  1  Bland,  418; 
Ellicott  v.  Warford,  4  Md.,  80. 
"  The  appointment  of  a  receiver," 


observes  Mr.  Justice  Eccleston,  in 
Ellicott  v.  Warford,  4  Md.,  85,  "does 
not  determine  any  right,  or  affect 
the  title  of  either  party,  in  any  man- 
ner whatever.  He  is  the  officer  of 
the  court,  and  truly  the  hand  of  the 
court.  His  holding  is  the  holding 
of  the  court  from  him  from  whom 
the  possession  was  taken.  He  is 
appointed  on  behalf  of  all  parties, 
and  not  of  the  plaintiff  or  of  one 
defendant  only.  His  appointment 
is  not  to  oust  any  party  of  bis  right 
to  the  possession  of  the  property, 
but  merely  to  retain  it  for  the  ben- 
efit of  the  party  who  may  ulti- 
mately appear  to  be  entitled  to  it." 
And  see  Williamson  v.  Wilson,  1 
Bland,  418,  for  a  learned  and  ex- 
haustive discussion  of  the  general 
principles  governing  the  jurisdic- 
tion of  equity  by  the  appointment 
of  receivers. 


4  RECEIVERS.  [CHAP.  I 

that  the  scope  of  the  receiver's  authority  is  more  compre- 
hensive, since  he  is  usually  required  to  pay  all  demands  upon 
the  fund  in  his  hands  to  the  extent  of  that  fund ;  while  a 
sheriff  is  only  obliged  to  make  payment  of  the  debt  men- 
tioned in  the  execution  out  of  the  property  levied  upon.' 
And  it  has  been  held  that  the  appointment  of  a  receiver  is, 
in  effect,  an  equitable  execution.2 

§  3.  The  jurisdiction  exercised  by  courts  of  equity  in  ad- 
ministering relief  by  the  extraordinary  remedy  of  a  receiver 
pendente  lite,  is  a  branch  of  their  general  preventive  juris- 
diction, being  intended  to  prevent  injury  to  the  thing  in 
controversy,  and  to  preserve  it  for  the  security  of  all  par- 
ties in  interest,  to  be  disposed  of  as  the  court  may  finally 
direct.3  The  power  is  justly  regarded  as  one  of  a  very  high 
nature,  and  not  to  be  exercised  where  it  would  be  produc- 
tive of  serious  injustice  or  injury  to  private  rights.4  The 
exercise  of  the  extraordinary  power  of  a  chancellor  in  ap- 
pointing receivers,  as  in  granting  writs  of  injunction  or  ne 
exeat,  is  an  exceedingly  delicate  and  responsible  duty,  to  be 
discharged  by  the  court  with  the  utmost  caution,  and  only 
under  such  special  or  peculiar  circumstances  as  demand 
summary  relief.5  Indeed,  the  appointment  of  a  receiver  is 
regarded  as  one  of  the  most  difficult  and  embarrassing 
duties  which  a  court  of  equity  is  called  upon  to  perform.6 
It  is  a  peremptory  measure,  whose  effect,  temporarily  at 
least,  is  to  deprive  of  his  property  a  defendant  in  posses- 
sion, before  a  final  judgment  or  decree  is  reached  by  the 
court  determining  the  rights  of  the  parties.7  It  is,  therefore, 
not  to  be  exercised  doubtingiy,  but  the  court  must  be  con- 
vinced that  the  relief  is  needful,  and  that  it  is  the  appropriate 

1  In  re  Merchants'  Insurance  Co. ,  Furlong  v.   Edwards,  3  Md.,  112; 
3  Biss.,  162.  Latham  v.  Chafee,  7  Fed.  Rep.,  52o. 

2  Hunt  v.  Wolfe,  2  Daly,  303.  See,    also,  Beverley  v.   Brooke,    1 

3  Mays  v.   Rose,   Freeni.   (Miss.),  Grat.,  187. 

703.  GDrurnniond,  J.,  in  Bill  v.  New 

4  Opinion  of  Frick,  J.,  in  Speights  Albany,  etc.,  R.  Co.,  2  Biss.,  390. 
v.  Peters,  9  Gill,  476.  »  Whitehead  v.  Wooten,  43  Miss., 

5  Crawford  v.  Ross,  39  Ga.,  44;  523. 


CHAP.  I.]  GENERAL  FEATURES.  5 

means  of  securing  an  appropriate  end.1  And  since  it  is  a 
serious  interference  with  the  rights  of  the  citizen,  without  the 
verdict  of  a  jury  and  before  a  regular  hearing,  it  should 
only  be  granted  for  the  prevention  of  manifest  wrong  and 
injury.2  And  because  it  divests  the  owner  of  property  of 
its  possession  before  a  final  hearing,  it  is  regarded  as  a 
severe  remedy,  not  to  be  adopted  save  in  a  clear  case,  and 
never  unless  plaintiff  would  otherwise  be  in  danger  of  suf- 
fering irreparable  loss.3 

§  4.  The  power  exercised  by  courts  of  equity  in  the  ap- 
pointment of  receivers  is  invoked  upon  many  occasions 
with  great  advantage  to  the  parties.  It  is  especially  bene- 
ficial when  there  is  danger  that  the  subject-matter  in  con- 
troversy may  be  wasted,  destroyed,  injured  or  removed 
during  the  progress  of  the  litigation,  the  object  of  the  re- 
lief being  to  secure  the  fund  for  the  person  who  may  ulti- 
mately be  found  entitled  thereto,  with  as  little  prejudice  as 
possible  to  any  of  those  concerned.4    And  a  receivership  is 

1  Chicago  &  Allegheny  Oil  &  Min-  is  danger  that  the  subject-matter 
ing  Co.  v.  United  States  Petroleum  of  controversy  may  be  wasted  or 
Co.,  57  Pa.  St.,  83;  S.  C,  6  Philad.,  destroyed,  impaired,  injured  or 
521.  removed   during   the    progress  of 

2  Crawford  v.  Ross,  39  Ga.,  44.  the  suit.  The  object  is  to  secure 
And  the  court  say :  "The  high  pre-  the  fund  for  the  party  found, 
rogative  act  of  taking  property  out  upon  final  hearing,  to  be  enti- 
of  the  hands  of  one,  and  putting  it  tied,  and  to  produce  as  little  preju- 
in  pound,  under  the  order  of  a  dice  as  possible  to  any  of  those 
judge,  ought  not  to  be  taken,  ex-  concerned.  When  one  party  has  a 
cept  to  prevent  manifest  wrong,  clear  right  to  the  possession  of 
imminently  impending."  property,  and  when  the  dispute  is 

3  Pullan  v.  Cincinnati  &  Chicago  as  to  the  title  only,  the  court  would 
R.  Co.,  4  Biss.,  47.  very  reluctantly  disturb  that  pos- 

4  Lenox  v.  Notrebe,  Hemp. ,  225.  session.  But  when  the  property  is 
"The  application  for  a  receiver,"  exposed  to  danger  and  to  loss,  and 
says  Mr.  Justice  Clayton,  "  is  ad-  the  party  in  possession  has  not  a 
dressed  to  the  sound  discretion  of  clear  legal  right  to  the  possession, 
the  court,  regulated  by  legal  prin-  it  is  the  duty  of  the  court  to  inter- 
cijjles,  and  is  exercised  by  the  courts  pose  and  to  have  it  secured."  See, 
upon  many  occasions  with  great  also,  Tregaskis  v.  Judge  of  Superior 
benefit  to  the  parties.      It  is  par-  Court,  47  Mich.,  509. 

ticularly  serviceable   when   there 


6  RECEIVERS.  [CHAP.  I. 

one  of  those  remedial  agencies  originally  devised  to  pre- 
serve the  fund  or  thing  in  controversy  from  removal  beyond 
the  jurisdiction,  or  from  spoliation,  waste  or  deterioration 
pendente  lite,  to  the  end  that  it  may  be  appropriated  as  the 
final  decree  shall  direct.1  A  court  of  equity,  by  its  order 
appointing  a  receiver,  takes  the  entire  subject-matter  of  the 
litigation  out  of  the  control  of  the  parties  and  into  its  own 
hands,  and  ultimately  disposes  of  all  questions,  legal  or  equi- 
table, growing  out  of  the  proceeding.  And  the  receiver's 
possession  being  the  possession  of  the  court  appointing 
him,  any  attempt  to  disturb  such  possession  without  leave 
of  the  court  may  be  treated  as  a  contempt  of  court,  and 
punished  accordingly.2 

§  5.  A  receiver  being  appointed  for  the  preservation  of 
the  fund  or  property  pendente  lite,  and  for  its  ultimate  dis- 
posal according  to  the  rights  and  priorities  of  the  parties 
entitled,  the  remedy  is  regarded  as  in  the  nature  of  a  seques- 
tration rather  than  as  an  attachment  of  the  property,  and 
it  ordinarily  gives  no  advantage  or  priority  to  the  person  at 
whose  instance  the  appointment  is  made,  over  other  parties 
in  interest.3  Kor  does  it  change  the  title  to  or  create  any 
lien  upon  the  property;  its  purpose  in  this  respect  being 
rather  like  that  of  an  injunction  pendente  lite,  to  preserve 
the  subject-matter  until  the  rights  of  all  parties  may  be 
judicially  determined.4  And  in  the  exercise  of  this  branch 
of  its  extraordinary  jurisdiction,  equity  reverses  the  ordi- 
nary course  of  administering  justice,  and  levies  upon  the 
property  a  kind  of  equitable  execution,  by  means  of  which 
it  makes  a  general  appropriation  thereof,  leaving  the  ques- 
tion of  who  may  finally  be  entitled  to  be  determined  there- 
after. It  follows,  therefore,  from  the  peculiar  nature  of  the 
remedy  as  thus  shown,  as  well  as  from  the  fact  that  the 

i  Myers  v.  Estell,  48  Miss.,  401.         Ellis  *.  Boston,  Hartford  &  Erie  R. 
2 Beverley   v.   Brooke,   4   Grat.,    Co.,  107  Mass.,  1. 
211.   •  *  Ellis  v.  Boston,  Hartford  &  Erie 

3  Beverley  v.  Brooke,  4  Grat.,  187;    E.  Co.,  107  Mass.,  1.    See,  also,  Ex 

parte  Dunn,  8  S.  C,  207. 


CHAP.  I.] 


GENERAL  FEATURES. 


court  must  often  act  before  the  merits  of  the  controversy 
have  been  fully  developed,  and  when  the  parties  in  interest 
are  not  all  before  the  court,  that  it  proceeds  with  extreme 
caution,  in  order  to  avoid  any  unnecessary  disturbance  of 
legal  rights  or  equitable  priorities.1 

§  6.  It  necessarily  follows  from  the  nature  of  the  juris- 
diction as  thus  far  disclosed,  as  well  as  from  the  purpose 
and  object  usually  had  in  view  in  the  appointment  of  a  re- 
ceiver pendente  lite,  that  the  remedy  is  a  provisional  or  aux- 


i  Beverley  v.  Brooke,  4  Grat.,  187. 
The  nature  and  functions  of  this 
extraordinary  jurisdiction  of  courts 
of  equity  are  very  clearly  stated  in 
the  opinion  of  the  court  in  this  case, 
by  Baldwin,  J.,  as  follows,  p.  208: 
"By  means  of  the  appointment  of 
a  receiver,  a  court  of  equity  takes 
possession  of  the  property  which  is 
the  subject  of  the  suit,  preserves  it 
from  waste  or  destruction,  secures 
and  collects  the  proceeds  or  profits, 
and  ultimately  disposes  of  them  ac- 
cording to  the  rights  and  priorities 
of  those  entitled,  whether  regular 
parties  in  the  cause,  or  only  parties 
in  interest  coming  before  the  court 
in  a  seasonable  time,  and  due  course 
of  proceeding,  to  assert  and  estab- 
lish their  pretensions.     The  receiver 
appointed  is  the  officer  and  repre- 
sentative of  the  court,  subject  to  its 
orders,  accountable  in  such  manner 
and  to  such  persons  as  the  court 
may  direct,  and  having  in  his  char- 
acter of  receiver  no  personal  inter- 
est   but  that  arising    out    of    his 
responsibility  for  the  correct  and 
faithful  discharge  of  his  duties.     It 
is  of  no  consequence  to  him  how  or 
when,  or  to  whom,  the  court  may 
dispose  of  the  funds  in  his  hands, 
provided  the  order  or  decree  of  the 
court  furnishes  to  liim  a  sufficient 


protection.     The  order  of  appoint- 
ment is  in  the  nature,  not  of  an 
attachment,  but  a  sequestration ;  it 
gives  in  itself  no  advantage  to  the 
party  applying   for  it  over  other 
claimants;  and  operates  prospect- 
ively upon  rents  and  profits,  which 
may  come  to  the  hands  of  the  re- 
ceiver, as  a  lien  in  favor  of  those 
interested,  according  to  then*  rights 
and  priorities  in  or  to  the  principal 
subject  out  of  which  those  rents 
and  profits  issue.     In  the  exercise 
of    this   summary    jurisdiction,    a 
court  of  equity  reverses,  in  a  great 
measure,  its  ordinary  course  of  ad- 
ministering justice;   beginning  at 
the  end,  and  levying  upon  the  prop- 
erty a  kind  of  equitable  execution, 
by  which  it  makes  a  general  instead 
of  a  specific  appropriation  of  the 
issues  and  profits,  and  afterwards 
determining  who  is  entitled  to  the 
benefit  of  its  quasi  process.     But 
acting,  as  it  often  must  of  necessity, 
before  the  merits  of  the  cause  have 
been  fully  developed,  and  not  un- 
frequently  when  the  proper  parties 
in  interest  are  not  all  before  the 
court,  it  proceeds  with  much  cau- 
tion and  circumspection,  in  order  to 
avoid  disturbing  unnecessarily  or 
injuriously  legal  rights  and  equi- 
table priorities." 


8  RECEIVERS.  [CHAP.  I 

iliary  one,  invoked  as  an  adjunct  or  aid  to  the  principal 
relief  sought  by  the  action,  and  not  always  or  necessarily 
the  ultimate  object  of  that  action.  The  application  for  a 
receiver  may  succeed  or  fail,  and  yet  in  no  manner  affect 
the  principal  controversy  or  determine  the  final  result.1 
And  in  this  respect  the  appointment  of  a  receiver  in  limine 
bears  no  closer  relation  to  the  action  in  which  this  extraor- 
dinary relief  is  sought,  than  an  attachment  in  aid  of  an 
action  upon  a  promissory  note  bears  to  such  action.2  The 
appointment  of  a  receiver  in  limine,  therefore,  like  the 
granting  of  a  preliminary  or  interlocutory  injunction,  is  not 
an  ultimate  determination  of  the  right  or  title,  and  the 
court,  in  passing  upon  the  application,  in  no  manner  decides 
the  questions  of  right  involved,  nor  anticipates  its  final  de- 
cision upon  the  merits  of  the  controversy;  the  leading  idea 
upon  the  preliminary  application  being  merely  to  husband 
the  property  or  fund  in  litigation  for  the  benefit  of  who- 
ever may  be  determined  in  the  end  to  be  entitled  thereto.3 
The  decision  upon  the  application  for  a  receiver  pendente 
lite  is,  therefore,  without  prejudice  to  the  final  decree 
which  the  court  may  be  called  upon  to  make,  and  the  court 
expresses  no  opinion  as  to  the  ultimate  questions  of  right 
involved.  And  if  the  plaintiff  presents  a,  prima  facie  case, 
showing  an  apparent  right  or  title  to  the  thing  in  contro- 
versy, and  that  there  is  imminent  danger  of  loss  without  the 
intervention  of  the  court,  the  relief  may  be  granted  with- 
out going  further  into  the  merits  upon  the  preliminary  ap- 


'Hottenstein  v.  Conrad,  9  Kan.,  2Hottenstein  v.  Conrad,  9  Kan., 

435;    Cooke  v.  Gwyn,  3  Atk.,  689.  435. 

See,  also,  Mays  v.  Rose,   Freem.  SHuguenin  v.  Baseley,  13  Ves., 

(Miss.),  703;  Chicago  and  Allegheny  105;  Cooke  v.  Gwyn,  3  Atk.,  689: 

Oil  and  Mining  Co.  v.  United  States  Ellicott    v.    Warford,   4  Md.,    80: 

Petroleum  Co.,  57  Pa.  St.,  83;  S.  C,  Blakeney  v.  Dufaur,  15  Beav.,  40: 

6   Philad.,  521;   Fellows  v.  Heer-  Leavitt  v.  Yates,  4  Edw.  Ch.,  162: 

mans,  13  Ab.  Pr.,  N.  S.,  1 ;  McCar-  Brown  v.  Northrup,  15  Ab.  Pr.,  N. 

thy  v.  Peake,  18  How.  Pr.,  138;  S.  S.,  333;  Ex  parte  Walker,  25  Ala., 

C,  9  Ab.  Pr.,  164.  104;  Bitting  v.  Ten  Eyck,  85  Ind., 

357. 


CIIAP.  I.] 


GENERAL   FEATURES. 


plication.1  Indeed,  upon  an  interlocutory  application  for  a 
receiver,  a  court  of  equity  usually  confines  itself  strictly  to 
the  point  which  it  is  called  upon  to  decide,  and  will  not  go 
into  the  merits  of  the  case  at  large,  since  the  court  is  bound 
to  express  its  opinion  only  to  the  extent  necessary  to  show 
the  grounds  upon  which  it  disposes  of  the  application.2 

§  7.  The  appointment  of  a  receiver  pendente  lite,  like 
the  granting  of  an  interlocutory  injunction,  is  to  a  consid- 
erable extent  a  matter  resting  in  the  discretion  of  the  court 
to  which  the  application  is  made,  to  be  governed  by  a  con- 
sideration of  the  entire  circumstances  of  the  case.3  And 
where  the  court  is  unable  to  see  that  any  benefit  will  result 
from  appointing  a  receiver  in  the  cause,  or  that  any  injury 


iLeavitt  v.  Yates,  4  Edw.  Ch., 
162;  Brown  v.  Northrup,  15  Ab. 
Pr.,  N.  S.,  333.  Leavitt  v.  Yates 
was  a  bill  to  set  aside  a  deed  of 
trust  transf  erring  certain  securities, 
and  a  motion  upon/ bill  and  an- 
swers for  an  injunction  and  for  a 
receiver  to  take  charge  of  the 
securities  pendente  lite.  McCoun, 
Vice  Chancellor,  observes:  "The 
argument  has  embraced  all  the 
points  which  the  pleadings  are  cal- 
culated to  present  when  the  cause 
shall  be  brought  to  a  hearing  for  a 
final  decree ;  but  it  does  not  follow 
that  a  decisive  opinion  is  to  be  ex- 
pressed in  this  stage  of  the  cause 
upon  the  rights  of  all  the  parties ; 
for,  whatever  may  be  the  result  of 
a  motion  of  this  kind,  the  general 
understanding  is  that  it  is  without 
prejudice  to  the  ultimate  decision 
which  the  court  may  be  called 
upon  to  make.  Insolvency  and 
danger  to  the  fund  pending  the 
litigation,  with  a  prima  facie  case 
and  probable  cause  for  sustaining 
the  bill,  are  or  ought  to  be  suffi- 
cient in  the  first  instance  to  found 


an  injunction  and  a  receivership 
upon,  without  going  minutely  into 
the  merits.  My  own  observation 
has  taught  me  that,  in  general,  it 
is  most  prudent  and  best  promotes 
the  ends  of  justice  to  go  no  further 
upon  the  motion." 

2  Skinners  Company  v.  Irish  So- 
ciety, 1  Myl.  &  Cr.,  162.  See,  also, 
Conro  v.  Gray,  4  How.  Pr.,  166. 

3  Owen  v.  Homan,  3  Mac.  &  G., 
378,  affirmed  on  appeal  to  the  House 
of  Lords,  4  H.  L.  Rep.,  997;  Ham- 
burgh Manufacturing  Co.  v.  Edsall, 
4  Halst.  Ch.,  141 ;  Chicago  and  Alle- 
gheny OU  and  Mining  Co.  v.  United 
States  Petroleum  Co.,  57  Pa.  St.,  83 ; 
S.  C,  6  Philad.,  521;  Pullan  v. 
Cincinnati  &  Chicago  R.  Co.,  4 
Biss.,  47;  Crane  v.  McCoy,  1  Bond, 
422;  Mays  v.  Rose,  Freern.  (Miss.), 
703;  Greville  v.  Fleming,  2  Jo.  & 
Lat.,  335;  Morrison  v.  Buckner, 
Hemp.,  442;  Whelpley  v.  Erie  Rail- 
way Co.,  6  Blatchf.,  271 ;  Hanna  v. 
Hanna,  89  N.  C,  68;  Williamson's 
Adm'r  v.  W.  C.  V.  M.  &  G.  S.  R. 
Co.,  33Grat.,624. 


10  RECEIVERS.  [CHAP.  I. 

will  follow  from  refusing  the  relief,  it  will  not  interfere,  es- 
pecially if  it  is  apparent  that  great  confusion  and  difficulty 
in  the  management  of  the  property  may  result  to  both  par- 
ties from  a  receivership.1  So  if,  upon  a  consideration  of  all 
the  circumstances  of  the  case,  it  is  apparent  that  greater  in- 
jury will  ensue  from  appointing  a  receiver  than  from  leav- 
ing the  property  in  its  present  possession,  or  if  other 
considerations  of  propriety  or  of  convenience  render  the  ap- 
pointment improper  or  inexpedient,  the  court  will  refuse  to 
interfere.2  Nor  will  a  receiver  be  appointed  in  an  improper 
case,  even  by  consent  of  the  parties,  especially  when  the 
rights  of  third  persons  are  concerned  and  may  be  jeopar- 
dized by  the  appointment.3  And  he  who  seeks  the  appoint- 
ment of  a  receiver  must  himself  come  into  court  with  clean 
hands.4 

§  8.  While  it  has  already  been  shown  that  the  court,  in 
passing  upon  the  application  for  a  receiver,  in  no  manner 
forestalls  or  anticipates  the  final  decision  upon  the  merits, 
the  probability  that  plaintiff  will  ultimately  be  entitled  to  a 
decree  in  his  action  is  still  a  material  element  to  be  consid- 
ered by  the  court.  And  when  upon  the  entire  record  this 
is  a  matter  of  much  doubt,  the  court  is  justified,  in  its  dis- 
cretion, in  refusing  a  receiver.5 

1  Hamburgh  Manufacturing  Co.  possession  of    the  property  being 

v.  Edsall,  4  Halst.  Ch.,  141.  disturbed.     It  is  unnecessary  to  do 

"  Vose  v.  Reed,  1  Woods,  647..  more  than  to  state  that  the  granting 

sWhelpleyu  Erie  Railway  Co.,  a  receiver  is  a  matter  of  discretion, 

6  Blatchf.,  271.  to  be  governed  by  a  view  of  the 

4  Hyde  Park  Gas  Co.  v.  Kerber,  5  whole  circumstances  of  the  case ; 
Bradw.,  132.  one  most  material  of  winch  circum- 

5  Owen  v.  Homan,  3  Mac.  &  G.,  stances  is  the  probability  of  the 
378,  affirmed  on  appeal  to  the  House  plaintiff  being  ultimately  entitled 
of  Lords,  4  H.  L.  Rep.,  997;  Wil-  to  a  decree.  In  this  case  many  of 
kinson  v.  Dobbie,  12  Blatchf.,  298.  the  important  points  arise  upon  the 
In  Owen  v.  Homan,  3  Mac.  &G.,  construction  of  the  deeds,  and  not 
378,  Lord  Truro  observes,  p.  411,  as  upon  disputed  facts;  and  I  repeat 
follows:  " I  am  of  opinion  that  the  that  in  my  opinion  that  construc- 
case  upon  the  whole  record  presents  tion  is  attended  with  too  much 
too  much  doubt  as  to  the  plaintiff's  doubt  and  difficulty  to  entitle  the 
right  to  a  decree  to  warrant  the  plaintiff  to  a  receiver." 


CHAP.  I.]  GENERAL  FEATURES.  11 

§  9.  The  power  of  appointing  receivers  is  necessarily  inher- 
ent in  courts  possessed  of  equitable  jurisdiction,  and  may  be 
invoked  whenever  there  is  an  estate  or  fund  in  existence  and 
no  competent  person  entitled  to  hold  it,  or  when  the  person 
entitled  occupies  the  relation  of  a  trustee  and  is  misusing  or 
misapplying  the  property.  And  when  property  constituting 
the  subject-matter  of  the  litigation  is  subject  to  clear  equi- 
ties in  favor  of  a  party  to  the  action  who  is  out  of  possession, 
the  court  may  appoint  a  receiver  when  the  relief  seems  to 
be  just  and  necessary  to  preserve  the  thing  in  dispute  from 
the  control  of  either  party  until  the  controversy  is  deter- 
mined.1 So  a  receiver  will  be  appointed  for  the  protection 
of  the  fund  when  plaintiff  has  an  equitable  interest,  and 
defendant  having  possession  of  the  property  is  wasting  it, 
or  removing  it  beyond  the  jurisdiction  of  the  court.2  And 
if  the  order  does  not  in  terms  fix  or  limit  the  duration  of 
the  receivership/it  will  be  construed  as  continuing  during 
the  pendency  of  the  suit,  unless  the  receiver  is  sooner  dis- 
charged.3 But  to  warrant  a  court  of  equity  in  incurring 
the  expense  of  a  receivership,  it  must  clearly  appear  that 
there  is  actual  property  in  existence  which  ought  to  be  pro- 
tected, and  the  courts  are  averse  to  interfering  when  the 
property  is  of  trifling  value.4 

§  10.  A  receiver  being  appointed  by  a  court  of  equity  in 
the  exercise  of  its  extraordinary  jurisdiction,  applications 
for  the  relief  are  governed  by  many  of  the  principles  which 
control  the  courts  in  administering  the  extraordinary  remedy 
of  an  injunction.  And  as  it  is  always  a  sufficient  objection 
to  the  granting  of  an  injunction,  that  the  person  aggrieved 
lias  a  full  and  adequate  remedy  at  law,5  so  courts  of  equity 
will  not  lend  their  aid  by  the  appointment  of  receivers  where 

i  Skinner  v.  Maxwell,  66  N.  C,  ^Coughron  v.  Swift,  18111.,  414; 

45;  Flagler  v.  Blunt,  32  N.  J.  Eq.,  Winkler  v.  Winkler,  40  111.,  179; 

518.  Poage  v.  Bell,  3  Rand.,  5S6;  Web- 

2  Vose  v.  Reed,  1  Woods,  647.  ster  v.  Couch,  6  Rand.,  519;  Mull. mi 

3  Weems  v.  Lathrop,  42  Tex.,  207.  v.  Jennings,  1  Stockt,  192 ;  Wooden 
*  Whitwortk  v.  Whyddon,  2  Mac.  v.  Wooden,  2  Green  Ck.,  429;  Skei- 

&  G.,  52.  man  v.  Clark,  4  Nev.,  138. 


12  RECEIVEES.  [CHAP.  I. 

the  persons  seeking  the  relief  have  ample  redress  by  the  usual 
course  of  proceedings  at  law,  or  where  the  law  affords  any 
other  safe  or  expedient  remedy.1  Thus,  where  proceedings 
are  instituted  by  a  creditor  of  a  banking  corporation  for  the 
appointment  of  a  receiver  to  wind  up  its  affairs,  but  it  is 
apparent  from  his  bill  that  whatever  rights  he  may  have 
are  cognizable  at  law  and  may  be  remedied  by  following 
the  course  prescribed  by  law  for  that  purpose,  the  applica- 
tion will  be  denied  and  the  plaintiff  will  be  left  to  pursue 
his  legal  remedy.2  Nor  does  it  necessarily  follow,  because 
the  remedy  at  law  is  attended  with  difficulty,  that  plaintiff 
may  have  relief  in  equity  by  a  receiver.3  So  where  the 
person  aggrieved,  having  a  remedy  at  law,  loses  that  remedy 
by  his  own  laches,  he  can  not  come  into  equity  and  have  a 
receiver.4  And  there  is  no  case  in  which  a  court  of  equity 
appoints  a  receiver  simply  because  it  will  be  productive  of 
no  harm.5 

§  11.  The  principal  grounds  upon  which  courts  of  equity 
grant  their  extraordinary  aid  by  the  appointment  of  re- 
ceivers pendente  lite,  are  that  the  person  seeking  the  relief 
has  shown  at  least  a  probable  interest  in  the  property,  and 
that  there  is  danger  of  its  being  lost  unless  a  receiver  is 
allowed,  the  element  of  danger  being  an  important  consid- 
eration in  the  case.6  And  a  remote  or  past  danger  will  not 
suffice  as  a  ground  for  the  relief,  but  there  must  be  a  well- 
grounded  apprehension  of  immediate  injury.7    The  power 


1  Sollory  v.  Leaver,  L.  R.,  9  Eq.,  3  Creinen  v.  Hawkes,  2  Jo.  &  Lat., 

22;    Cremen  v.   Hawkes,  2  Jo.  &  674. 

Lat.,  674;  Parnily  v.  Tenth  Ward  4Dre\vry  v.  Barnes,  3  Euss.,  94. 

Bank,  3  Edw.  Ch.,  395;  Corey  v.  5 Orphan  Asylum    v.   McCartee. 

Long,  43  How.  Pr.,  497;  S.  C,  12  Hopk.  Ch.,  429;  Corey  v.  Long,  43 

Ab.Pr.,N.S.,  427;  Opinion  of  Prick,  How.  Pr.,  498;  S.  C,  12  Ab.  Pr., 

J. ,  in  Speights  v.  Peters,  9  Gill,  476 ;  N.  S. ,  427. 

Morrison  v.  Buckner,  Hemp.,  442;  6 Goodyear  v.  Betts,  7  How.  Pr., 

Rice  v.  St.  Paul  &  Pacific  R.  Co.,  187;  Flagler  v.  Blunt,  32  N.  J.  Eq.. 

24  Minn.,  464.  518.     See,  also,  Orphan  Asylum  r. 

-'Parmly  v.  Tenth  Ward  Bank,  McCartee,  Hopk.  Ch.,  429;  Vose  r. 

3  Edw.  Ch.,  395.  Reed,  1  Woods,  647. 

-  Kean  v.  Colt,  1  Halst.  Ch.,  365. 


CHAP.  I.] 


GENERAL    FEA  TUBES. 


13 


of  appointment  is  usually  invoked  either  for  the  prevention 
of  fraud,  to  save  the  subject  of  litigation  from  material  in- 
jury, or  to  rescue  it  from  threatened  destruction.1  And  to 
"warrant  the  interposition  of  a  court  of  equity  by  the  aid  of 
a  receiver,  it  is  essential  that  plaintiff  should  show,  first, 
either  a  clear,  legal  right  in  himself  to  the  property  in  con- 
troversy, or  that  he  has  some  hen  upon  it,  or  that  it  consti- 
tutes a  special  fund  out  of  which  he  is  entitled  to  satisfaction 
of  his  demand.  And,  secondly,  it  must  appear  that  posses- 
sion of  the  property  was  obtained  by  defendant  through 
fraud ;  or  that  the  property  itself,  or  the  income  from  it,  is 
in  danger  of  loss  from  the  neglect,  waste,  misconduct  or  in- 
solvency of  the  defendant.2  Not  only  must  the  plaintiff 
show  a  case  of  adverse  and  conflicting  claims  to  the  prop- 


1  Baker  v.  Administrator  of  Back- 
us, 32  111.,  70. 

2  Mays  v.  Rose,  Freem.  (Miss.),  703. 
See,  also,  Leavitt  v.  Yates,  4  Edw. 
Ch.,  162;  Beecher  v.  Bininger,  7 
Blatchf.,  170.  "  An  application  for 
the  appointment  of  a  receiver,"  say 
the  court,  in  Mays  v.  Rose,  Freem. 
(Miss.),  p.  718,  "is  one  which  is 
addressed  to  the  sound  discretion  of 
the  court,  to  be  exercised  as  an 
auxiliary  to  the  attainment  of  the 
ends  of  justice.  It  is  one  of  the 
modes  in  which  the  preventive  jus- 
tice of  a  court  of  equity  is  admin- 
istered. The  great  object  is  to 
secure  the  property  or  thing  in  con- 
troversy, so  that  it  may  be  sub- 
jected to  such  order  or  decree  as 
the  court  may  make  in  the  par- 
ticular case.  It  is  intended  equally 
for  the  security  of  both  plaintiff 
and  defendant.  The  possession  of 
the  receiver  is  not  adverse  to  or  in 
hostility  to  the  rights  of  the  defend- 
ant; that  possession  is  the  posses- 
sion of  the  coui-t,  held  equally  for 
the  greater  safety  of  all  the  parties 


concerned.  A  reference  to  the 
various  decisions  upon  motions  for 
the  appointment  of  receivers,  shows 
that  each  case  has  been  made  to 
depend  upon  its  own  peculiar  feat- 
ures, and  throws  but  little  light 
upon  any  new  case,  except  so  far 
as  they  establish  the  general  prin- 
ciples which  should  govern  the 
court  in  the  exercise  of  its  discretion 
upon  these  motions.  These  prin- 
ciples are:  that  the  plaintiff  must 
show,  first,  either  that  he  has  a 
clear  right  to  the  property  itself; 
or  that  he  has  some  lien  upon  it ; 
or  that  the  property  constitutes  a 
special  fund  to  which  he  has  a  right 
to  resort  for  the  satisfaction  of  his 
claim.  And  secondly,  that  the 
possession  of  the  property  by  the 
defendant  was  obtained  by  fraud  ; 
or  that  the  property  itself,  or  the 
income  arising  from  it,  is  in  danger 
of  loss  from  the  neglect,  waste, 
misconduct  or  insolvency  of  the  de- 
fendant. These  are  believed  to  be 
the  general  rules  governing  all  ap- 
plications of  this  kind." 


14  KECEIVEKS.  [CHAP.  I. 

erty,  but  he  must  also  show  some  emergency  or  danger  of 
loss  demanding  immediate  action,  and  that  his  own  right  is 
reasonably  clear  and  free  from  doubt.1  If  the  dispute  is  as 
to  title  only,  the  court  very  reluctantly  disturbs  possession 
by  a  receiver,  but  if  the  property  is  exposed  to  danger  and 
to  loss,  and  the  person  in  possession  has  not  a  clear  legal 
right  thereto,  the  court  will  interpose  by  a  receiver  for  the 
security  of  the  property.2 

§  12.  It  is  in  all  cases  essential  to  the  exercise  of  the 
jurisdiction,  that  the  plaintiff  should  have  a  present  existing 
interest  in  the  property  over  which  he  seeks  to  have  a  re- 
ceiver appointed.  And  when  it  is  apparent  that  he  has 
parted  with  his  entire  interest  in  and  title  to  the  property, 
the  court  will  not  interfere,  even  though  sufficient  grounds 
may  be  shown  to  have  warranted  the  relief,  when  the  of- 
fense complained  of  was  committed,  and  when  plaintiff  still 
had  an  interest  in  the  subject-matter.3  And  a  receiver  will 
only  be  appointed  in  behalf  of  a  party  in  interest  in  the 
litigation,  and  a  stranger  to  the  suit,  who  represents  no  in- 
terest at  stake,  is  not  entitled  to  participate  in  the  proceed- 
ings, or  to  thrust  himself  forward  and  obtain  a  receiver, 
especially  when  the  parties  to  the  action  are  not  desirous 
of  having  one  appointed.4  So  the  right  to  propose  a  suit- 
able and  proper  person  for  receiver,  after  the  order  for  his 
appointment  has  been  granted,  rests  in  the  first  instance 
with  the  parties  in  interest  in  the  cause,  and  the  court  will 
not  permit  a  stranger  to  the  action  to  come  in  and  propose 
a  person  for  the  office.5 

§  13.  A  receiver  pendente  lite  is  appointed  only  for  the 
benefit  of  such  of  the  parties  to  the  cause  as  shall  appear 

1Beecher  v.  Bininger,  7  Blatchf.,  defendants  for  the  injury  done  to 
170.  the  property  while  he  yet  had  an 

2  Opinion  of  Clayton,  J.,  in  Lenox    interest  therein.     Id. 

v.  Notrebe,  Hemp.,  225.  4  O'Mahoney  v.  Belmont,  62  N.  Y., 

3  Smith  v.  Wells,  20  How.  Pr.,  158.  133,  affirming  S.  C,  37  N.  Y.  Sup'r 
And  this  principle  would  seem  to    Ct.  R.,  223. 

hold  good,  even  though  plaintiff  5  Attorney-General  v.  Day,  Madd., 
still  has  a  right  of  action  against    246,  1st  American  edition,  470. 


CHAP.  I.]  GENERAL  FEATURES.  15 

to  be  entitled  to  the  fund  in  controversy,  and  not  for  the 
benefit  of  strangers  to  the  suit.  And  if  the  receivership 
interferes  with  the  rights  of  a  stranger,  he  may  apply  to  the 
court  to  be  heard  pro  interesse  suo,  and  his  rights  will  be 
protected  against  any  inequitable  interference  therewith  by 
the  officer  of  the  court.  But  the  appointment  of  the  re- 
ceiver does  not  give  a  mere  stranger  to  the  suit  the  benefit 
of  the  proceedings,  so  that  he  may  claim  what  he  would 
not  otherwise  have  been  entitled  to.1 

§  14.  It  is  important  to  observe,  at  the  outset,  that  courts 
of  equity  lend  their  extraordinary  aid  by  the  appointment 
of  receivers,  as  in  the  granting  of  injunctions,  only  in  be- 
half of  those  who  have  used  due  diligence  in  the  assertion 
of  their  rights,  and  in  invoking  the  aid  of  the  court.  And 
a  plaintiff,  whose  right  is  otherwise  clear,  and  sufficient  to 
entitle  him  to  the  relief,  may  be  entirely  debarred  from  the 
aid  of  the  court  by  hi£  own  laches,  which  will  be  construed 
as  a  waiver  of  the  right  if  he  delays  an  unreasonable  time 
in  its  assertion.2  So  an  application  for  a  receiver  is  not  en- 
titled to  favorable  consideration,  when  the  plaintiff  has  lain 
by  for  a  long  period  of  years,  and  quietly  acquiesced  in  a 
condition  of  affairs  which  he  seeks  to  change  by  obtaining 
a  receiver.3    For  example,  where  plaintiffs  seek  the  aid  of  a 

1  Howell  v.  Ripley,  10  Paige,  43.  court  say:  "  The  complainants  have 

2 Browne.  Chase,  Walk.  (Mich.),  come   too  late  with  this    motion. 

43.  And  see  Gould  v.  Try  on,  id.,  353;  They    filed  then  bill  August    13, 

Gray  v.  Chaplin,  2  Russ.,  126;  Fo-  1839,  nearly  three  years  ago,  and, 

garty  v.  Bourke,  2  Dr.  &"War.,  580;  for  aught  that  appears  from  their 

Skinners  Company  v.  Irish  Society,  petition,  might  with  due  diligence 

1  Myl.  &  Cr.,  162.   Brown  v.  Chase,  have  obtained  a  decree  long  before 

Walk.  (Mich.),  43,  was  a  bill  in  equi-  this  time,  and  had  the  mortgaged 

ty  for  the  foreclosure  of  a  mortgage,  premises    sold.     If  they  were    en- 

on  which  an  application  was  made  titled  to  a  receiver,  their  neglect  to 

for    a    receiver   of  the  rents  and  apply  for  his  appointment  at    an 

profits  of  the  mortgaged  premises,  earlier  day  should  be  construed  as  a 

on  the  ground  of  insufficiency  of  waiver  of  their  right.     Motion  de- 

the  security  and  insolvency  of  the  nied." 

mortgagor.     The  application  for  a  3Fogarty    v.   Bourke,    2    Dr.   & 

receiver   was   made   nearly  three  War.,  580;  Gray  v.  Chaplin,  2  Russ., 

years   after   filing   the   bill.     The  126;   Skinners  Company   v.    Irish 


16  RECEIVERS.  [CHAP.  I. 

receiver  over  property  in  which  they  claim  some  interest, 
but  which  has  been  in  possession  of  defendants  for  a  long 
period  of  years,  during  all  which  time  plaintiffs  and  those 
under  whom  they  claim  have  acquiesced  in  such  possession, 
equity  will  not  interfere  by  a  receiver  in  limine}  So  when 
the  application  is  based  upon  the  alleged  misconduct  of  de- 
fendant as  a  trustee,  and  his  misappropriation  of  funds,  but 
it  is  shown  that  the  state  of  affairs  complained  of  has  ex- 
isted for  very  many  years,  with  plaintiffs'  knowledge  and 
without  objection  on  their  part,  the  court  will  not  take  the 
property  from  defendant's  hands  and  place  it  in  the  custody 
of  a  receiver.2  And  when  the  wrong  complained  of  oc- 
curred, if  at  all,  several  years  before  the  application  for 
relief,  and  so  long  since  as  to  afford  no  ground  for  apprehen- 
sion of  impending  danger,  and  no  act  is  alleged  as  being 
now  threatened,  a  receiver  will  not  be  allowed.3 

§  15.  The  relief  granted  by  courts  of  equity  m  the  ap- 
pointment of  receivers  pendente  lite  bears  in  many  respects 
a  close  analogy  to  that  by  preliminary  injunction.  Some 
points  of  resemblance  in  the  two  forms  of  remedy  have 
been  already  indicated,  while  others  will  frequently  appear 
throughout  the  following  pages.  Both  are  extraordinary 
equitable  remedies,  as  distinguished  from  the  usual  and 
ordinary  modes  of  administering  relief  either  in  courts  of 
law  or  of  equity.  Both  are  essentially  preventive  in  their 
nature,  being  properly  used  only  for  the  prevention  of  fu- 
ture injury,  rather  than  for  the  redress  of  past  grievances. 
Both,  too,  have  one  common  object  in  as  far  as  they  seek 
to  preserve  the  res  or  subject-matter  of  the  litigation  unim- 
paired, to  be  disposed  of  in  accordance  with  the  future  de- 
cree or  order  of  the  court.  Perhaps  the  principal  element 
of  difference  between  these  two  important  remedies  lies  in 
this:  that  an  injunction  is  strictly  a  conservative  remedy, 

Society,  1  Myl.  &  Cr.,   1G2.     And        'Gray  v.  Chaplin,  2  Russ.,  12G. 
see    Municipal    Commissioners    of        -  Skinners  Company  v.  Irish  So- 

Carrickf ergus v.  Lockhart,  Ir.  Rep.,  ciety,  1  Myl.  &  Cr.,  162. 
3  Eq.,  515.  3Kean  v.  Colt,  1  Halst.  Ch.,  365. 


CHAP.  I.]  GENERAL  FEATURES.  17 

merely  restraining  action  and  preserving  matters  in  statu 
quo,  without  affecting  the  possession  of  the  property  or 
fund  in  controversy ;  while  the  appointment  of  a  receiver 
is  usually  a  more  active  remedy,  since  it  changes  the  posses- 
sion as  well  as  the  subsequent  control  and  management  of 
the  property.  A  court  of  equity  by  an  injunction  ties  up 
the  hands  of  defendants,  and  preserves  unchanged,  not  only 
;he  property  itself,  but  the  relations  of  all  parties  thereto. 
But  in  appointing  a  receiver,  the  court  goes  still  farther, 
since  it  wrests  the  possession  from  defendant,  and  assumes 
and  maintains  the  entire  management  and  control  of  the 
property  or  fund,  frequently  changing  its  form,  and  retain- 
ing possession  through  its  officer,  the  receiver,  until  the 
rights  of  all  parties  in  interest  are  satisfactorily  determined. 
§  10.  From  the  points  of  resemblance  already  indicated 
between  these  two  extraordinary  equitable  remedies,  it  is 
not  to  be  inferred  that  the  appointment  of  a  receiver  nec- 
essarily follows  from  the  granting  of  an  injunction,  or  that 
the  two  remedies  are  necessarily  inseparable.  And  while  it 
frequently  happens  that  the  courts  are  called  upon  to  ad- 
minister both  species  of  relief  in  the  same  action,  and  at 
one  and  the  same  time,  yet  it  by  no  means  follows  that  be- 
cause an  injunction  is  granted  a  receiver  must  be  appointed, 
and  the  two  are  to  be  treated  as  distinct  and  independent 
matters.  A  court  of  equity  may,  therefore,  refuse  a  re- 
ceiver, although  the  case  presented  is  a  fitting  one  for  an 
injunction,  and  although  an  injunction  lias  already  been 
granted.1  It  has  been  held,  however,  that  the  power  of 
appointing  a  receiver,  when  the  relief  is  necessary  for  the 
collection  and  preservation  of  property  pending  an  injunc- 
•  tion  suit,  is  a  necessary  incident  to  the  power  of  granting 
an  injunction;  and  if  the  latter  power  be  expressly  con- 

iRawnsley  v.  Trenton  Mutual  said  by  the  Lord  Chancellor  that 
Life  &  Fire  Insurance  Co. ,  1  Stockt. ,  ' '  the  rights  to  those  different  reme- 
347 ;  Oakley  v.  Patcrson  Bank,  1  dies  are  essentially  distinct,  and  de- 
Green  Ch.,  173.  And  see  Hall  v.  pend  upon  totally  different  grounds 
Hall,  3  Mac.  &  G.,  85,  where  it  was  and  circumstances." 
2 


18  KECEIVERS.  [CHAP.  I. 

f erred  by  law  upon  a  judge  in  vacation,  the  former  may  be 
regarded  as  conferred  by  implication.1 

§  17.     Ordinarily,  unless  perhaps  in  the  case  of  infants 
or  lunatics,  a  suit  must  be  actually  pending  to  justify  a 
court  of  equity  in  appointing  a  receiver;2  and  it  follows, 
necessarily,  that  the  person  whose  property  it  is  sought  to 
place  in  the  receiver's  hands  must  be  made  a  party  to  the 
suit,  in  order  that  he  may  have  an  opportunity  of  resisting 
the  application,  the  granting  of  which  might  result  in  irrep- 
arable injury  to  his  interests.3    And  the  facts  relied  upon 
as  the  ground  for  the  relief  should  be  distinctly  and  specific- 
ally set  forth,  in  order  that  defendant  may  be  fully  apprised 
thereof  and  have  an  opportunity  to  resist  the  application.4 
It  will  not,  therefore,  suffice  to  allege  in  general  terms  that 
plaintiff  is  entitled  on  principles  of  equity  to  the  interposi- 
tion of  the  court,  but  the  facts  relied  upon  should  specific- 
ally appear.5    And  while  fraudulent  conduct  on  the  part  of 
defendant,  or  danger  to  the  property  or  fund  in  controversy, 
is   frequently   made  the  foundation  for  a  receivership,  it 
will  not  suffice  merely  to  allege  such  fraud  or  danger  upon 
information  generally,  without  specifying  the  sources  of 
the  information.     And  a  bill  whose  only  allegations  upon 
these  points  are  thus  vague  and  general  does  not  present 
such  a  case  as  to  justify  the  court  in  interfering  by  a  re- 
ceiver.6  Nor  will  mere  general  averments  of  plaintiff's  belief 
that  the  property  in  controversy  will  be  wasted  or  destroyed, 
unless  a  receiver  is  appointed,  warrant  the  court  in  interfer- 
ino-,  but  the  grounds  upon  which  such  belief  is  founded 
should  be  set  forth.7 

1  Penn y.  Whiteheads,  12  Grat.,  74.  Backus,  32  HI.,  79.     See,  also,  Dale 

2Baker  v.  Administrator  of  v.  Kent,  58  Ind.,  584. 

Backus,  32  HI.,  79;  Merchants'   &        * Tomlinson  v.  Ward,   2  Conn., 

Manufacturers'   National    Bank  v.  396;  Blondheim  v.  Moore,  11  Md., 

Kent,  Circuit  Judge,  43 Mich.,  292 ;  365. 

Jones   v.    Schall,    45   Mich.,    379;        5 Tomlinson  v.  Ward,  2  Conn., 

Hardy  v.  McClellan,  53  Miss.,  507.  396. 

And  see  In  re  Hancock,  27  Hun,        6  Blondheim   v.  Moore,  11  MdM 

575.  365. 
3  Baker  v.    Administrator  of       7Hannau.  Hanna,  89  N.  C,  68. 


CHAP.  I.]  GENERAL  FEATURES.  19 

§  18.  While  insolvency  of  a  defendant  in  possession, 
and  against  whom  a  receiver  is  sought,  is  frequently  relied 
upon  by  the  courts  as  a  ground  for  granting  the  relief,1  it  is 
to  be  observed  that  insolvency  will  not  of  itself  warrant  a 
court  in  appointing  a  receiver.  It  must  also  appear  that 
plaintiff  has  a  probable  cause  of  action  against  the  defend- 
ant, and  that  the  benefit  to  result  from  his  recovery  will 
either  be  wholly  lost  or  substantially  impaired  by  reason  of 
the  insolvency,  unless  a  receiver  is  appointed.2 

§  19.  As  against  a  defendant  in  the  possession  and  en- 
joyment of  property  which  is  the  subject-matter  of  the  liti- 
gation, equity  always  proceeds  with  extreme  caution  in 
appointing  a  receiver.3  Where  the  property  has  been  held 
and  enjoyed  by  defendants  in  possession  for  a  long  series  of 
years,  and  plaintiff  shows  no  real  danger,  a  receiver  will  not 
ordinarily  be  appointed  in  limine}  And  where  plaintiff's 
object  is  to  assert  a  right  to  property  possessed  by  defend- 
ant, a  receiver,  if  appointed  at  all,  is  appointed  only  upon 
the  principle  of  preserving  the  subject-matter  pending  a 
litigation  which  is  to  determine  the  rights  of  the  parties.  In 
all  such  cases,  a  court  of  equity  necessarily  exercises  a  large 
discretion  as  to  whether  it  will  or  will  not  take  possession 
of  the  property  by  its  receiver,  and  this  discretion  is  gov- 
erned by  a  consideration  of  all  the  circumstances  of  the 
case.  It  is,  therefore,  difficult  to  establish  any  fixed  rule 
in  such  cases,  although  it  may  be  said  generally,  that  if  the 
case  as  presented  upon  the  application  for  a  receiver  is 
clearly  in  favor  of  plaintiff,  indicating  that  he  will  probably 
be  entitled  to  a  final  recovery,  the  risk  of  injury  to  defend- 
ant is  very  small,  and  the  court  does  not  hesitate  to  inter- 
fere.    If  there  be  more  doubt  as  to  plaintiff's  right,  there 

iSee  Leavitt  v.  Yates,  4  Edw.  378;   Municipal  Commissioners  of 

Ch.,  162.  Carrickf ergus v.  Lockhart,  Ir.  Rep., 

2 Gregory  v.  Gregory,  33  N.  Y.  3Eq.,515. 

Supr.  Ct.  R.,  opinion  of  Jones,  J.,  <  Municipal    Commissioners     of 

p.  39.  Carrickf  ergus  v.  Lockhart,  Ir.  Rep., 

s  Owen  v.  Homan,  4  H.  L.  Rep.,  3  Eq.,  515. 
997,  affirming  S.  C,  3  Mac.  &  G., 


20 


RECEIVERS. 


[chap. 


is  of  course  more  difficulty  in  passing  upon  the  application, 
the  question  being  one  of  degree,  as  to  which  it  is  impos- 
sible to  lay  down  any  precise  rule.1 


'Owen  v.  Homan,  4  H.  L.  Rep., 
997,  affirming  S.  C,  3  Mac.  &  G., 
378.  The  doctrine  of  the  text  is 
well  stated  in  this  case  in  the  opin- 
ion of  the  Lord  Chancellor,  as  fol- 
lows, page  1032 :  "  The  receiver,  if 
appointed  in  this  case,  must  be  ap- 
pointed on  the  principle  on  which 
the  court  of  chancery  acts,  of  pre- 
serving property  pending  the  liti- 
gation which  is  to  decide  the  right 
of  the  litigant  parties.  In  sxich 
cases  the  court  must  of  necessity 
exercise  a  discretion  as  to  whether 
it  will  or  will  not  take  possession  of 
the  property  by  its  officer.  No  pos- 
itive, unvarying  rule  can  be  laid 
down  as  to  whether  the  court  will 
or  will  not  interfere  by  this  kind  of 
interim  protection  of  the  property. 
Where  indeed  the  property  is  as  it 
were  in  medio,  in  the  enjoyment  of 
no  one,  the  court  can  hardly  do 
wrong  in  taking  possession.  It  is 
the  common  interest  of  all  parties 
that  the  court  should  prevent  a 
scramble.  Such  is  the  case  when 
a  receiver  of  a  property  of  a  de- 
ceased person  is  appointed,  pending 
a  litigation  in  the  ecclesiastical 
court  as  to  the  right  of  probate  or 
administration.  No  one  is  in  the 
actual,  lawful  enjoyment  of  prop- 
erty so  circumstanced,  and  no 
wrong  can  be  done  to  any  one  by 
taking  and  preserving  it  for  the 
benefit  of  the  successful  litigant. 
But  where  the  object  of  the  plaint- 
iff is  to  assert  a  right  to  property  of 
which  the  defendant  is  in  the  en- 
joyment, the  case  is  necessarily 
involved  in  further  questions.     The 


court,  by  taking  possession  at  the 
instance  of  the  plaintiff,  may  be 
doing  a  wrong  to  the  defendant ;  in 
some  cases  an  irreparable  wrong. 
If  the  plaintiff  should  eventually 
fail  in  establisliing  his  right  against 
the  defendant,  the  court  may,  by 
its  interim  interference,  have 
caused  mischief  to  the  defendant 
for  which  the  subsequent  restora- 
tion of  the  property  may  afford  no 
adequate  compensation.  In  all 
cases,  therefore,  where  the  court 
interferes  by  the  appointment  of  a 
receiver  of  property  in  the  posses- 
sion of  the  defendant  before  the 
title  of  the  defendant  is  established 
by  decree,  it  exercises  a  discretion 
to  be  governed  by  all  the  circum- 
stances of  the  case.  When  the 
evidence  on  which  the  court  is  to 
act  (here  the  only  evidence  is  the 
answer  of  Mrs.  Homan)  is  very 
clearly  in  favor  of  the  plaintiff, 
then  the  risk  of  eventual  injury  to 
the  defendant  is  very  small,  and 
the  court  does  not  hesitate  to  inter- 
fere. Where  there  is  more  of  doubt 
there  is  of  course  more  of  diffi- 
culty; the  question  is  one  of  de- 
gree, as  to  which,  therefore,  it  is 
impossible  to  lay  down  any  precise 
and  unvarying  rule.  In  this  case 
Lord  Truro  did  not  think  the  title  of 
the  plaintiff  was  so  clearly  made 
out  as  to  justify  the  court  in  turn- 
ing the  defendant  out  of  possession 
before  the  plaintiffs  had  finally  es- 
tablished their  right,  and  I  am  not 
prepared  to  say  that  the  conclusion 
at  which  he  arrived  was  wrong ;  on 
the  contrary,  I  think  it  was  right." 


CHAP.  I.]  GENERAL  FEATURES.  21 

§  20.  As  between  tenants  in  common  of  personal  prop- 
erty, the  courts  are  usually  averse  to  appointing  a  receiver 
over  the  joint  property  upon  the  application  of  one  co-ten- 
ant against  the  other.1  And  one  co-tenant  can  not,  on  the 
ground  of  a  refusal  of  the  other  to  divide  the  property, 
maintain  a  bill  in  equity  for  a  receiver  and  for  a  sale  and 
division,  when  it  is  not  shown  that  the  chattels  were  agreed 
to  be  or  were  used  in  carrying  on  any  business  for  the  joint 
benefit  of  the  parties,  as  partners  or  otherwise ;  or  that  the 
tenancy  in  common  was  of  such  a  nature  as  to  require  a 
sale  of  the  chattels,  or  a  termination  of  the  tenancy;  and 
when  it  does  not  appear  that  there  is  any  necessity  for  a 
division  of  the  property,  on  account  of  the  death  or  insolv- 
ency of  one  of  the  co-tenants.  And  this  is  true,  even 
though  the  bill  charges  the  defendant  with  having  the  sole 
and  exclusive  use  of  the  property,  and  that  he  is  diminish- 
ing its  value  and  refuses  to  make  a  division  thereof,  since 
the  remedy  for  such  grievances,  if  they  amount  to  a  con- 
version of  the  property,  must  be  sought  by  an  action  at  law.2 
So  in  the  case  of  joint  owners  of  the  machinery  and  ma- 
terial of  a  printing  office,  upon  a  bill  by  one  joint  owner  or 
tenant  in  common  against  the  other  for  a  partition  of  the 
property,  which  is  in  defendant's  possession,  the  court  will 
refuse  a  receiver  if  the  defendant  in  possession  will  give 
adequate  security  for  the  rents  and  profits  pendente  lite? 

§  21.  The  subject-matter  of  the  jurisdiction  of  equity 
being  property  rights,  a  court  of  equity  is  not  the  proper 
forum  for  determining  controversies  concerning  the  right  to 
hold  public  offices,  all  such  questions  being  purely  of  a  legal 
nature  and  cognizable  only  in  courts  of  law.  Equity  will 
not,  therefore,  extend  its  extraordinary  jurisdiction  by  the 

1  Low  v.  Holmes,  2  C.  E.  Green,  mon,  see  Andrews  v.  Betts,  8  Hun, 

148;  Blood  u.  Blood,  110  Mass.,  545.  322;    Shehan   v.    Mahar,   17  Hun, 

As  to  the  right  to  a  receiver  over  129. 

personal  property  in  an  action  for  -  Blood  v.  Blood,  110  Mass.,  545. 

its  sale  and  for  a  distribution  of  the  3  Low  v.  Holmes,  2  C.  E.  Green, 

proceeds   among  tenants  in  com-  148. 


22 


RECEIVERS. 


[CHAP.  I. 


granting  of  injunctions  and  the  appointment  of  receivers, 
to  the  extent  of  determining  the  rights  of  conflicting  claim- 
ants to  a  public  office,  but  will  leave  all  such  questions  to 
be  determined  in  the  manner  provided  by  law.1  And  where 
there  are  rival  claimants  to  an  office  of  a  public  nature, 
held  by  appointment  from  the  executive  of  the  state,  a 
court  of  equity  will  not,  in  behalf  of  one  of  such  claimants, 
enjoin  the  other  from  receiving  the  fees  and  emoluments  of 
the  office,  and  will  not  appoint  a  receiver  of  such  fees, 
although  it  is  alleged  that  defendant,  who  has  intruded  into 
the  office,  is  insolvent.  The  appointment  of  a  receiver  in 
such  a  case  would  be,  in  effect,  the  assumption  by  the  court 
of  a  right  to  make  a  temporary  appointment  to  the  office, 
which  is  by  law  required  to  be  filled  by  the  executive  depart- 
ment of  the  government,  and  would  be  utterly  foreign  to 
the  jurisdiction  of  a  court  of  equity.2    So  where  a  contro- 


1  Tappan  v.  Gray,  9  Paige,  507. 
See,  also,  Peoples.  Draper,  24  Barb., 
265 ;  Stone  v.  Wetmore,  42  Ga.,  601. 

2  Tappan  v.  Gray,  9  Paige,  507. 
Complainant,  claiming  to  be  enti- 
tled to  the  office  of  flour  inspector 
of  the  city  of  New  York,  filed  bis 
bill  alleging  that  defendant  had 
usurped  the  office  and  was  receiv- 
ing its  fees  and  emoluments ;  that 
he  was  wholly  insolvent  and  unable 
to  respond  for  the  fees  which  he 
might  receive  before  the  right  to 
the  office  could  be  determined  by 
legal  proceedings;  and  prayed  an 
injunction  and  a  receiver.  The  Vice 
Chancellor  decided  that  the  bill 
showed  a  prima  facie  case  of  intru- 
sion by  defendant  into  complain- 
ant's office;  and  that  defendant's 
insolvency  was  sufficient  to  sustain 
the  bill  until  the  right  could  be  de- 
termined upon  an  information  in 
the  nature  of  a  quo  warranto. 
Upon  appeal,  Walworth,  Chancel- 
lor, held  as  follows :    "If  the  Vice 


Chancellor  was  right  in  the  conclu- 
sion that  the  complainant  was  en- 
titled to  discharge  the  duties  of  the 
office  of  flour  inspector,  after  the 
appointment  by  the  governor  dur- 
ing the  recess  of  the  senate,  and 
that  such  appointment  of  the  de- 
fendant to  the  office  was  illegal  and 
unauthorized,  I  think  he  erred  in 
supposing  that  this  court  had  juris- 
diction to  afford  the  complainant 
any  relief  at  this  time.  This  court 
certainly  ought  not  to  assume  the 
jurisdiction  to  oust  an  officer  in  no 
way  connected  "with  the  adminis- 
tration of  justice  here,  aud  over 
whose  appointment  it  has  no  con- 
trol, from  an  office,  the  duties  of 
which  he  is  discharging  under  color 
of  an  appointment  from  the  exec- 
utive of  the  state,  until  his  right  to 
such  office  has  been  settled  in  the 
mode  prescribed  by  the  Revised 
Statutes  for  the  determination  of 
his  claim.  That,  however,  would 
be  the  necessary  effect  of  an  in- 


CHAP.  I.]  GENERAL  FEATURES.  23 

versy  is  pending  in  quo  warranto  to  test  the  right  to  a 
public  office,  equity  will  not  assume  jurisdiction  over  the 
matter,  or  appoint  a  receiver  to  take  charge  of  the  fees  and 
emoluments  of  the  office.  A  receiver  is  appointed  by  a 
court  of  equity  only  when  a  controversy  is  actually  pending 
in  that  court,  and  a  proceeding  in  quo  warranto  being  a 
legal  proceeding,  and  depending  upon  legal  and  not  equita- 
ble rights,  equity  will  not  interfere,  the  exercise  of  its  juris- 
diction in  such  a  case  being  contrary  to  public  policy  as 
well  as  unsustained  by  authority.1 

§  22.  When,  however,  the  question  is  not  one  which 
affects  the  right  or  title  to  the  office  in  controversy,  but 
merely  the  right  to  its  fees  or  profits  as  property,  in  which 
plaintiff  claims  a  right  or  interest  by  virtue  of  contract  re- 
lations with  the  officer,  there  would  seem  to  be  no  objection 
upon  principle  to  interfering  by  a  receiver  in  a  case  other- 
wise appropriate  for  the  relief.2  And  when  a  public  officer 
had  assigned  the  profits  and  emoluments  of  his  office  to 
trustees  to  secure  payment  of  his  debts,  a  receiver  was  ap- 
pointed pendente  lite,  upon  a  bill  to  compel  the  execution 
of  the   trust,  but    without    prejudice   to   the   question   of 

junction  such  as  is  prayed  for  in  are  interested  in  having  the  duties 
this  case.  For  the  receiving  and  of  the  office  properly  discharged, 
intermeddling  with  and  enjoying  to  appoint  a  receiver  of  the  fees 
the  fees,  profits  and  advantages  of  and  emoluments  of  such  an  office, 
the  office  are  so  connected  with  the  The  appointment  of  a  receiver  to 
proper  discharge  of  the  duties  of  discharge  the  duties  of  the  office, 
the  office- itself,  that  they  could  not  in  connection  with  the  receipt  of 
be  separated  without  rendering  the  the  fees  and  emoluments,  would  be 
office  of  no  benefit  whatever  to  the  still  more  objectionable  in  princi- 
defendant,  should  he  finally  sue-  pie,  as  it  would,  in  effect,  be  the 
ceed  in  establishing  his  right  to  it  assumption  of  a  right  by  this  court 
on  the  quo  warranto.  Such  relief,  to  make  a  temporary  appointment 
therefore,  could  not  be  granted  of  a  public  officer,  whose  appoint- 
without  depriving  the  public  of  the  ruent  is  by  law  required  to  be  made 
benefit  which  the  inspection  law  by  the  executive  department  of  the 
contemplates,  until  the  termination  government." 

of  this  litigation.     And  it  would  be  '  Stone  v.  Wetmore,  42  Ga.,  G01. 

equally    inconsistent    with    public  -Palmer  v.  Vaughan,  3  Swans., 

policy  and  the  rights  of  those  who  173;  Cheek  v.  Tilley,  31  Ind.,  121. 


2t  RECEIVERS.  [CHAP.  I. 

whether  the  profits  were  assignable.1  So  when  a  deputy 
clerk  was  employed  by  a  clerk  of  the  court  upon  a  contract 
providing  that  he  should  receive  as  compensation  for  his 
services  one-half  the  fees  of  the  office,  in  an  action  by  the 
deputy  against  the  principal  to  recover  the  amount  doe 
under  the  contract,  an  injunction  was  granted  and  a  re- 
ceiver appointed  to  collect  the  fees  pending  the  litigation, 
plaintiff  alleging  the  insolvency  of  defendant  and  his  ina- 
bility to  satisfy  any  judgment  which  might  be  had  against 
him.  And  the  relief  was  based  upon  the  ground  that  the 
collection  of  the  fees  was  not  an  official  dutv,  but  a  right 
pertaining  to  the  officer  individually;  and  that  plaintiff, 
under  his  contract,  was  entitled  to  the  same  right,  since  a 
portion  of  the  fees  belonged  to  him,  and  they  might  be 
collected  by  a  receiver  without  in  any  manner  interfering 
with  defendant's  official  duties.2  But  equity  will  not  ap- 
point a  receiver  of  the  salary  of  a  public  officer  when  there 
is  no  permanent  fund  out  of  which  it  is  payable,  it  being  paid 
out  of  an  allowance  voted  by  parliament  from  year  to  year; 
and  when  no  action  can  be  maintained  to  recover  the  allow- 
ance or  to  enforce  its  payment.3 

§  23.  In  many  of  the  states  of  this  country  the  jurisdic- 
tion of  the  courts  over  the  subject  of  receivers  has  been,  to 
a  considerable  degree,  fixed  or  controlled  by  legislation,  en- 
larging or  abridging  the  jurisdiction  as  exercised  by  courts 
of  equity  independent  of  statute.  This  is  especially  true 
of  those  states  which  have  adopted  codes  of  procedure  simi- 
lar to  that  of  New  York.  And  in  ISTew  York  it  is  held  that 
the  appointment  of  a  receiver,  like  other  provisional  reme- 
dies prescribed  in  the  code  of  procedure,  is  a  mere  incident 
of  the  general  jurisdiction  of  the  courts/ and  not  an  essential 
part  of  such  jurisdiction.     And  the  legislature,  having  pre- 

1  Palmer  v.  Vaughan,  3  Swans. ,  court,  in  lieu  of  appointing  a  re- 

173.     But  the  court  directed  that  if  ceiver. 

the  parties  should  consent  to  such  -Cheek  v.  Tilley,  31  Ind.,  121. 

an  arrangement,  the  fees  and  prof-  s  Cooper  v.  Eeilly,  1  Russ.  &  M., 

its  of  the  office  might  be  paid  into  560,  affirming  S.  C,  2  Sim.,  560. 


CHAP.  I.]  GENERAL  FEATURES.  25 

scribed  the  cases  in  which  a  receiver  may  be  appointed 
pendente  lite,  and  as  a  proceeding  in  the  action,  have  as  care- 
fully excluded  all  other  cases,  thus  prohibiting  the  appoint- 
ment except  as  authorized  by  the  code.1  But  in  Xorth 
Carolina,  while  the  code  of  procedure  has  specified  certain 
cases  in  which  a  receiver  may  be  appointed,  it  is  held  that 
the  code  has  not  materially  altered  the  general  equity  juris- 
diction of  the  courts  over  the  subject,  which  remains  as 
before.2  In  England,  under  the  Supreme  Court  of  Judicature 
Act  of  1873,  the  power  of  appointing  receivers  has  been 
extended  to  all  cases  where  it  shall  appear  to  the  court  to 
be  just  or  convenient,  and  the  relief  may  be  granted  either 
unconditionally,  or  upon  such  terms  as  the  court  may  deem 
just.3 

§  24.  An  important  principle  of  general  application  in 
the  exercise  of  this  branch  of  the  extraordinary  jurisdiction 
of  equity  is  that  plamtiff  is  never  entitled  to  a  receiver 
when  the  equities  of  his  case  are  fully  and  fairly  denied  by 
the  sworn  answer  of  defendant.  When,  therefore,  the  ap- 
plication for  a  receiver  is  made  after  the  coming  in  of  the 
answer,  and  the  equities  of  the  bill  upon  which  the  receiver 
is  sought  are  fully  denied  by  defendant's  answer  under 
oath,  and  the  evidence  adduced  in  support  of  the  bill  does 
not  overcome  the  denials  of  the  answer,  the  court  will  refuse 

1  Fellows  v.    Heermans,  13   Ab.  be  made  either  unconditionally  or 

Pr.,  N.  S.,  1.  upon  such  terms  and  conditions  as 

*  Skinner  v.  Maxwell,  66  N.  C,  the  court  shall    think  just,"   etc. 

45.     See,  also,  Battle  v.  Davis,  id.,  See  this  act  construed  in  Pease  v. 

252.  Fletcher,    1    Ch.    D.,    273;    Porter 

3  Supreme   Court  of    Judicature  v.    Lopes,   7   Ch.  D.,   358;   Anglo- 
Act,  August  5, 1873.    Paragraph  8  of  Italian  Bank  v.  Davies,  9  Ch.  D., 
section  25  provides  as  follows:  "  A  275;  Bryant  v.  Bull,  10  Ch.  D.,  153 
mandamus  or  an  injunction  may  Smith  v.  Cowell,  6  Q.  B.  D.,  75 
be  granted  or  a  receiver  appointed  Fuggte  v.  Bland,  11  Q.  B.  D.,  711 
by  an   interlocutory  order  of  the  Howell  v.   Dawson,   13  Q.  B.  D. 
court  in  all  cases  in  which  it  shall  67;  In  re  Coney,  29  Ch.  D.,  993 
appear  to  the  court  to  be  just  or  Stanger  Leathes  v.  Stanger  Leathes, 
convenient  that  such  order  should  Weekly  Notes,  1882,  p.  71. 
be  made ;  and  any  such  order  may 


'20  RECEIVERS.  [CHAP.  I. 

to  appoint  a  receiver.1  In  such  cases,  the  plaintiff,  having 
addressed  himself  to  the  conscience  of  the  defendant,  has 
made  him  a  witness  and  must  take  his  answer  as  true,  unless 
he  can  overcome  it  by  other  testimony.2  And  the  question 
is  no  longer  regarded  as  one  addressed  to  the  discretion  of 
the  court,  but  it  is  judicial  error  to  appoint  a  receiver  when 
the  charges  of  the  bill  are  thus  denied.3  So  if  a  receiver 
lias  already  been  appointed,  he  will  be  discharged  upon  the 
coming  in  of  defendant's  answer  fully  denying  the  equities 
of  the  bill.4  Indeed,  the  rule  as  here  stated  is  analogous  to 
the  well-established  rule  which  governs  applications  for  the 
dissolution  of  interlocutory  injunctions,  which  is,  that  de- 
fendant is  entitled  to  a  dissolution  of  the  injunction  upon 
filing  his  answer  fully  denying  the  equities  of  the  bill.5 

§  25.  The  question  whether  an  appeal  will  lie  from  an 
order  granting  or  refusing  a  receiver  in  limine  is  one  of  con- 
siderable importance,  upon  which  the  authorities  are  far 
from  reconcilable.  The  conflict  of  authority  upon  this 
point  is  attributable  in  part  to  the  difference  in  practice  in 
the  different  states  with  regard  to  appeals,  and  in  part  to 
the  different  views  of  the  courts  as  to  whether  such  orders 
are  final  in  their  nature  and  affect  the  substantial  rights  of 
the  parties.  It  may  be  safely  said  that,  since  the  appointing 
or  refusing  a  receiver  is  largely  a  matter  of  sound  judicial 
discretion,  if  the  testimony  addressed  to  the  court  below  is 
conflicting,  and  if  that  court,  after  duly  weighing  and  con- 
sidering it,  refuses  to  appoint  a  receiver,  an  appellate  court 

i  Thompsen  v.  Diffenderf er,  1  Md.  <  Druiy  v.  Roberts,  2  Md.  Ch. ,  157 ; 

Ch.,  489;  Simmons  v.  Henderson,  Voshell  v.  Hynson,  26  Md.,  83. 

Freem.  (Miss.),  493 ;  Henn  v.  Walsh,  5  Simmons  v.  Henderson,  Freem. 

2  Edw.  Ch. ,  129 ;  Buchanan  v.  Com-  (Miss.),  493.    And  see  for  application 

stock,  57  Barb.,  581;  Fairbairn  v.  of  the  rule  to  cases  of  injunctions, 

Fisher,  4  Jones  Eq.,  390;  Callanan  Parkinson  v.  Trousdale,   3  Scam., 

v.  Shaw,  19  Iowa,  183 ;  Rhodes  v.  367 ;  Roberts  v.  Anderson,  2  Johns. 

Lee,  32  Ga.,  470.  Ch.,  202;  HoUister  v.  Barkley,  9  N. 

2  Thompsen  v.  Diffenderf  er,  1  Md.  H.,  230 ;  Hatch  v.  Daniels,  1  Halst. 
Ch.,489.  Ch.,  14;    Washer   v.  Brown,  id., 

3  Fairbairn  v.  Fisher,  4  Jones  Eq.,  81. 
390. 


CHAP.  I.]  GENEEAL  FEATURES. 


27 


will  not  interfere  with  the  exercise  of  this  discretion,  in  the 
absence  of  any  facts  showing  that  it  has  been  abused.1  And 
when  the  testimony  is  conflicting  and  the  court  below  has, 
after  hearing,  refused  to  revoke  its  appointment  of  a  re- 
ceiver, an  appellate  court  will  refuse  to  control  the  discre- 
tion of  the  inferior  tribunal.2 

§  2G.     It  has  been  said  in  general  terms,  upon  the  question 
under  consideration,  that  since  the  appointment  of  a  receiver 
to  take  charge  of  property  pendente  lite  is  an  interlocutory 
order,  no  appeal  will  lie  therefrom.3     And  it  was  formerly 
held  in  Indiana,  that  an  appeal  would  not  lie  from  the  re- 
fusal of  a  court  below  to  set  aside  the  appointment  of  a 
receiver,  all  orders  touching  the  appointing  or  removing  of 
receivers  being  regarded  as  interlocutory  orders,  and  the 
statute  authorizing  appeals  from  interlocutory  orders  not 
embracing  such  cases.4    But  by  a  later  statute  an  appeal  is 
authorized  from  an  or/ler  appointing  or  refusing  a  receiver.5 
And  it  is  held  in  Nevada,  under  the  practice  and  procedure 
in  that  state,  that  an  appeal  will  not  he  from  an  interlocu- 
tory order  appointing  a  receiver,  and  that  the  action  of  the 
inferior  court  in  such  matters  can  only  be  revised  upon  an 
appeal  from  the  final  judgment  in  the  cause.6    So  in  Penn- 
sylvania, where  an  appeal  lies  only  from  a  final  order  or 
decree,  an  order  granting  an  injunction  and  appointing  a 
receiver,  upon  the  filing  of  a  bill  for  the  settlement  of  part- 
nership affairs,  is  not  such  a  final  order  within  the  intent  of 
the  statute,  and  no  appeal  will  lie  therefrom,  it  being  purely 
an  interlocutory  matter.7     And  it  is  held  in  Ohio,  that  an 
order  appointing  a  receiver  to  take  the  revenues  of  a  rail- 
way and  bring  them  into  court,  subject  to  its  order  and 

i  Reid  v.  Reid,  38  Ga.,  24;  Gunby  5  Dale  v.  Kent,  58  Ind.,  584.   And 

v.  Thompson,  56  Ga.,  316;  Crawford  see    Buchanan  v.   Berkshire    Life 

v.  Spurring,  56  Ga.,  611 ;  Gardner  v.  Ins.  Co.,  96  Ind.,  510. 

Howell,  60  Ga.,  11.  6 Meadow  Valley  Mining  Co.  v. 

2Robenson  v.  Ross,  40  Ga.,  375;  Dodds,  6  Nev.,  261. 

(  ohen  v.  Meyers,  42  Ga.,  46.  ''Holden's  Administrators  v.  Me- 

a  Wilson  v.  Davis,  1  Montana,  98.  Makin,  Par.  Eq.  Cas.,  270. 

*  Wood  v.  Brewer,  9  Ind.,  86. 


28  RECEIVERS.  [CHAP.  I. 

without  making  any  application  of  the  funds,  except  as  to 
certain  accrued  costs,  is.  not  a  final  order  from  which  an  ap- 
peal will  lie.1  So  in  Illinois,  a  writ  of  error  will  not  lie  to 
a  purely  interlocutory  order  appointing  a  receiver,  no  final 
decree  having  been  rendered  determining  the  rights  of  the 
parties.2  And  in  Tennessee,  even  under  a  statute  authoriz- 
ing the  supreme  court  to  grant  writs  of  supersedeas  to  in- 
terlocutory orders,  as  in  case  of  a  final  decree,  an  order 
appointing  a  receiver,  being  within  the  discretion  of  the 
court  for  the  purpose  of  preserving  property  pendente  lite. 
can  not  be  superseded  by  the  supreme  court.3  Nor  will  a 
bill  of  review  lie  to  revise  or  correct  the  action  of  the  court 
in  appointing  a  receiver,  since,  the  order  being  interlocu- 
tory, it  may  be  revised  or  corrected  by  the  same  court;  or. 
if  improvidently  made,  it  may  be  corrected  upon  the  final 
hearing.4  So  under  the  statute  of  California  regulating 
appeals,  no  appeal  lies  from  an  order  appointing  a  receiver.5 
And  in  Kansas,  an  order  of  a  judge  at  chambers  appointing 
a  receiver  is  not  a  final  order  involving  the  merits  of  the 
action,  but  a  mere  provisional  or  interlocutory  order  from 
which  no  appeal  will  lie.6 

§  27.  In  Michigan,  where  the  laws  of  the  state  restrict 
the  right  of  appeal  to  decrees  and  final  orders,  the  question 
under  discussion  has  been  made  to  turn  upon  whether  the 
appointing  of  a  receiver  is  a  substantial  decision  of  the 
merits  involved,  and  the  principal  relief  sought,  or  whether 
it  is  merely  ancillary,  or  incidental  to  the  principal  relief. 


1  Eaton  &  Hamilton   R.    Co.   v.  3Baird  v.  Turnpike  Co.,  1  Lea, 

Varnura,  10  Ohio  St.,  622.     But  see  394;  Bramley  v.  Tyree,  1  Lea,  531 ; 

C.  S.  &  C.  R.  Co.  v.  Sloan,  31  Ohio  Roberson  v.  Roberson,  3  Lea,  50. 

St.,  1,  for  a  full  discussion  of  the  4  Johnston  v.  Hanner,  2  Lea,  8. 

right  of  appeal  in  such  cases  as  af-  5  French  Bank  Case,  53  Cal.,  495: 

fected  by  the  code  of  procedure,  as  Emeric  v.  Alvarado,  64  Cal.,  529. 

well  as  the  power  to  appoint  or  dis-  cHottenstein  v.  Conrad,  5  Kan., 

charge  a  receiver  by  a  judge  at  249;  Kansas  Rolling  Mill  Co.  r.  A.. 

chambers.  T.  &  S.  F.  R.  Co.,  31  Kan.,  90. 

2Coates  v.  Cunningham,  80  El., 
467. 


".HAT.  I.]  GENERAL    FEATURES.  29 

Thus,  where  the  object  of  the  action  is  to  remove  the  ad- 
ministrators of  an  estate,  and  to  procure  a  receiver  to  take 
charge  of  the  assets  until  the  question  of  removal  is  de- 
termined, the  order  appointing  a  receiver,  although  nomi- 
nally interlocutory,  is  regarded  as  in  effect  a  final  order  or 
decree,  from  which  an  appeal  will  lie,  since  it  gives  the 
relief  prayed  for  as  the  end  and  object  of  the  bill  upon 
that  branch  of  the  case.1  So  upon  a  bill  by  the  executor 
of  a  deceased  partner  for  an  account  of  the  partnership 
transactions,  an  order  for  a  receiver  to  take  charge  of  the 
property  held  by  defendant  as  surviving  partner,  although 
interlocutory  in  point  of  time,  is  in  substance  and  effect  a 
decree  of  the  court  to  the  extent  that  an  appeal  will  he 
therefrom.  The  order  is,  therefore,  to  be  considered  as  re- 
gards its  effect  upon  the  rights  of  the  parties,  rather  than 
as  to  the  stage  of  the  cause  when  made.  And  since  the  de- 
fendant, who  would  otherwise  be  entitled  to  possession  of 
all  the  assets  and  to  close  up  the  firm  business,  is  by  the 
order  divested  of  all  control  over  the  matter,  and  the  en- 
tire management  of  the  business  is  placed  in  the  receiver's 
hands,  the  order  partakes  of  the  nature  of  a  decree,  to  the 
extent,  at  least,  of    being  appealable.2     Where,  however, 

1  Lewis  v.  Campau,  14  Mich.,  458.  the  net  proceeds  would  belong  to 

2  Barry  v.  Briggs,  22  Mich.,  201.  the  executor.  The  order  divests 
Campbell,  C.  J.,  observes,  p.  206:  the  whole  body  of  the  property, 
' '  The  effect  of  tbis  order  (appoint-  and  puts  its  management  as  well 
ing  the  receiver)  is  to  divest  the  as  ownership  into  other  hands.  It 
entire  legal  estate  of  defendant  in  does  very  nearly  all  that  could  be 
property  over  which  he  had  this  done  under  the  bill  by  a  decree 
exclusive  control,  as  well  as  exclu-  upon  the  hearing.  Tbe  striking  of 
sive  title,  and  in  which  he  was  balances  and  the  final  distribution, 
equitably  as  well  as  legally  inter-  although  not  universally  are  quite 
ested,  and  in  which  no  one  else  had  frequently  subsequent  steps  to  the 
any  rights,  except  to  receive  the  principal  decree;  and  in  the  pres- 
amount  which  might  belong  to  the  ent  case,  the  principal  object  of  tbe 
deceased  partner's  estate  after  the  bill  is  to  transfer  the  trust  into  new 
accounts  should  be  closed  and  the  hands,  for  execution.  All  tho 
funds  converted.  The  specific  other  objects  are  subordinate  to 
property  and  its  disposal  belonged  this  main  purpose.  An  adjudica- 
to  defendant.     A  certain  share  of  tion  which  produces  such  impor- 


30 


RECEIVERS. 


[chap. 


the  receivership  is  merely  ancillary  or  incidental  to  the 
principal  relief  sought,  no  appeal  will  lie  from  an  order  ap- 
pointing a  receiver.1  So  an  order  appointing  a  receiver  to 
take  possession  of  certain  securities  claimed  by  a  trustee, 
the  title  to  which  is  in  dispute,  is  treated  as  an  interlocutory 
order  resting  in  the  discretion  of  the  court,  and  hence  not 
appealable.2  And  an  order  refusing  a  receiver  in  an  action 
for  the  foreclosure  of  a  mortgage  is  merely  interlocutory 
and  not  appealable.3  And  it  is  held  under  the  code  of  pro- 
cedure in  New  York,  that  an  appeal  will  lie  from  an  order 
denying  a  motion  for  a  receiver,  since  the  appellate  court 
may  review  all  orders  which  affect  a  substantial  right,  even 
though  they  rest  in  the  discretion  of  the  court.4  So  under 
the  statutes  of  Minnesota  an  order  refusing  a  receiver  in 
accordance  with  the  report  of  a  referee  is  an  order  refusing 
a  provisional  remedy,  from  which  an  appeal  will  he.5  And 
in  the  same  state  an  order  appointing  a  receiver  is  an  order 
affecting  a  substantial  right  of  the  defendant  and  is  appeal- 
able.6 


tant  effects,  and  which  actually 
transfers  the  entire  estate  from  the 
defendant,  is  to  all  intents  and  pur- 
poses a  decree  as  far  as  it  goes. 
.  .  .  It  would  be  a  very  singular 
tiling  if  a  court  could,  by  antici- 
pating the  proper  date  of  a  decree 
which  would  be  appealable,  pro- 
duce all  the  consequences  of  a  de- 
cree, and  yet  deprive  a  party  of  his 
right  to  a  review.  The  statutes 
regulating  appeals  have  regard  to 
the  rights  of  parties,  and  not  to 
senseless  formalities.  And  the  prac- 
tice in  this  state,  as  well  as  else- 
where, has  always  been  to  apply 
them  to  that  end.  .  .  .  We  think 
the  order  in  the  case  before  us  is 
appealable,  because  it  divests  de- 
fendant's estate."  Motion  to  dis- 
miss appeal  denied. 


Campau,  15  Mich., 
Vandermeulen,    41 


1  Duncan  v. 
415. 

-  Brown    v. 
Mich.,  418. 

3Beecher  v.  M.  &  P.  R.  M.  Co., 
40  Mich.,  307. 

^Dollard  v.  Taylor,  33  N.  Y. 
Supr.  Ct.  E.,  496.  And  see  as  to  the 
power  of  the  courts  of  New  York 
under  the  code,  pending  an  appeal 
from  a  judgment,  to  appoint  a  re- 
ceiver in  behalf  of  appellant,  over 
property  of  which  the  other  party 
would  otherwise  be  entitled  to  pos- 
session under  the  judgment  of  the 
court,  Fellows  v.  Heermans,  13  Ab. 
Pr.,  N.  S.,  1. 

5  Grant  v.  Webb,  21  Minn.,  39. 

6  Knight  v.  Nash,  22  Minn., 
452. 


CHAP.  I.]  GENERAL  FEATURES.  31 

§  27 a.  If  the  decree  appointing  a  receiver  determines 
the  right  to  the  property  in  controversy,  so  that  the  party  in 
whose  favor  it  is  rendered  is  entitled  to  its  immediate  execu- 
tion, an  appeal  will  lie,  even  though  something  still  remains 
to  be  done  to  fully  carry  the  decree  into  execution.  Thus, 
when  a  bill  is  filed  by  stockholders  to  set  aside  a  lease  of 
the  property  of  a  corporation  upon  the  ground  of  fraud, 
and  for  the  appointment  of  a  receiver,  and  upon  a  hearing 
on  the  merits  a  decree  is  rendered  setting  aside  the  lease, 
appointing  a  receiver,  and  directing  that  the  company  and 
its  directors  deliver  to  him  all  corporate  property,  records 
and  papers,  and  that  he  continue  the  business  of  the  com- 
pany, the  decree  is  so  far  final  that  an  appeal  will  lie,  even 
though  an  accounting  is  still  necessary  to  adjust  the  rights 
of  the  parties.1 

§  28.  Under  the  practice  prevailing  in  jSTew  Jerse}^,  it  is 
held  that,  if  the  court  below  upon  the  case  presented  had 
authority  and  jurisdiction  to  order  the  appointment  of  a 
receiver,  if  in  making  such  order  no  manifest  error  was 
committed,  it  will  not  be  reversed  on  certiorari;  and  that 
to  reverse  the  action  of  the  lower  court  by  certiorari,  it  must 
appear  to  the  appellate  tribunal  that  the  order  was  an  illegal 
one.  And  in  such  case  the  appellate  court  will  not  weigh 
the  evidence  on  which  the  court  below  acted,  and  if  there 
was  enough  in  the  case  to  give  the  court  below  jurisdiction 
and  power  to  act,  that  will  be  deemed  sufficient.2 

§  29.  As  regards  the  effect  of  an  appeal  upon  the  func- 
tions of  a  receiver  appointed  by  the  court  below,  it  has  been 
held  in  Ohio,  that  where  receivers  are  appointed  in  an 
action  to  obtain  the  direction  and  judgment  of  the  court 
as  to  the  construction  of  a  will,  and  as  to  the  duties  of 
executors  in  carrying  it  into  effect,  and  praying  for  an  order 
of  sale  of  real  estate  for  the  payment  of  legacies,  and  for 
distribution,  the  receivers  still  remain  in  office  pending  an 

iWinthrop  Iron  Co.  v.   Meeker,        2journeay  v#  Brown,  2  Dutch 
109  U.  S.,  180.  111. 


32  receivers.  [cnAr.  I. 

appeal  from  the  judgment  of  the  court  below.1  But  in 
Florida,  where  the  laws  of  the  state  authorize  appeals  from 
interlocutory  orders,  and  authorize  the  appellate  court  to 
issue  a  supersedeas  pending  such  an  appeal,  if  a  supersedeas  is 
granted  on  an  appeal  from  an  order  allowing  a  preliminary 
injunction  and  a  receiver,  it  has  the  effect  of  suspending  the 
power  of  the  court  below,  and  hence  the  power  of  its  officer, 
the  receiver,  whose  authority  thus  becomes  nugatory  by 
operation  of  law.  And  while  it  does  not  render  unlawful 
any  act  done  by  the  receiver  before  the  appeal  was  taken, 
it  forbids  him  further  to  act ;  and  it  then  becomes  his  duty 
to  restore  the  property  to  the  person  from  whom  it  was 
taken,  since  his  authority  to  take  being  inoperative,  his 
authority  to  hold  is  equally  so,  both  being  derived  from  the 
same  order.2  In  California,  it  is  held  that  upon  an  appeal 
from  an  order  adjudging  a  defendant  to  be  insolvent,  the 
functions  of  a  receiver  appointed  in  the  cause  are  not  sus- 
pended ;  and  the  court  will  not,  therefore,  stay  proceedings 
in  an  action  brought  by  the  receiver.3 

§  30.  When  two  different  persons  whose  interests  are 
conflicting  are  proceeding  for  the  appointment  of  a  receiver 
in  separate  actions,  the  question  whether  the  receiver  shall 
be  appointed  upon  motion  of  one  plaintiff  or  the  other  is 
regarded  as  of  minor  importance  when  the  object  of  each 
proceeding  is  the  preservation  of  the  fund  in  controversy, 
and  its  ultimate  distribution  among  creditors.  And  when, 
in  such  case,  the  appointment  in  one  suit  is  not  completed 
by  reason  of  an  appeal  from  the  order,  the  court  may  per- 
mit the  plaintiff  in  the  other  suit  to  proceed  and  obtain  a 
receiver  of  the  fund  for  the  benefit  of  all  concerned,  and 
such  appointment  will  not  be  vacated.4 

§  31.  As  regards  the  nature  of  defendant's  interest  in 
property  which  it  is  sought  to  subject  to  a  receivership,  it 

1  Swing  v.  Townsend,  24  Ohio  St.,  3  In  re  Real  Estate  Associates,  53 
I.     But  see  Allen  v.  Chadburn,  3    Cal.,  35G. 

Baxter,  225.  4  Lottimer  v.  Lord,  4  E.  D.  Smith, 

2  State  v.  Johnson,  13  Fla.,  33.  183. 


CITAP.  I.]  GENERAL   FEATURES.  33 

has  been  held  that  if  the  property  is  such  as  to  be  subject 
to  execution  by  creditors  of  defendant,  it  is  competent  for 
a  court  of  equity  to  appoint  a  receiver;  otherwise  not.  And 
relying  upon  this  distinction,  the  court  refused  to  appoint 
a  receiver  over  a  pension  granted  by  government  to  the  de- 
fendant, who  had  conveyed  his  interest  therein,  with  other 
property,  to  secure  an  annuitant.1 

§  32.  A  receiver  will  not  be  appointed  over  property  of 
such  a  nature  that  it  is  impossible  for  the  court  to  put  him 
in  possession,  and  when  the  court  has  no  control  over  the 
officers  or  persons  entrusted  with  the  management  of  the 
property,  as  in  the  case  of  a  permit  or  license  to  occupy  a 
stall  in  a  city  market,  the  control  of  which  is  wholly  vested 
in  certain  municipal  officers,  whose  discretion  in  granting  or 
withholding  the  permit  is  beyond  control  by  the  courts.2 
Nor  will  a  court  of  equity  grant  a  receiver  over  certain 
rates  or  taxes,  which  are  to  be  fixed  by  a  future  assessment 
and  to  be  collected  at  a  future  period  by  public  officers  des- 
ignated for  that  purpose,  upon  the  application  of  a  creditor 
who  has  loaned  money  for  a  work  of  public  improvement, 
to  be  repaid  out  of  such  rates.  And  it  is  a  sufficient  objec- 
tion to  the  relief  in  such  a  case,  that  the  remedy  at  law,  by 
mandamus  or  otherwise,  to  compel  the  officers  to  act,  affords 
an  adequate  protection  to  the  creditor.3 

§  33.  While  it  is  competent  for  a  court  of  equity,  by  an 
interlocutory  order,  to  take  possession  of  property  by  its  re- 
ceiver, pending  litigation  concerning  the  rights  of  the  parties, 
yet  where  the  rights  of  third  persons  have  intervened,  who 
are  not  parties  to  the  record,  as  in  the  case  of  innocent  pur- 
chasers of  the  property  in  contest,  the  court  will  not  exer- 
cise its  extraordinary  jurisdiction  by  ordering  the  property 
into  the  possession  of  its  receiver.  The  relief  will  be  re- 
fused in  such  case,  on  the  ground  that  the  rights  of  pur- 
chasers in  good  faith  are  not  to  be  adjudicated  or  determined 

1  Davis  v.  Duko  of  Marlborough,        2  Barry  v.  Kennedy,  11  Ab.  Pr., 

1  Swans.,  74;  S.  C,  2  Wils.  Cb.,  N.  S.,421. 

130.    See  S.  C,  2  Swans.,  108.  »  Drewry  v.  Barnes,  3  Russ.,  94. 

3 


34  RECEIVERS.  [CHAT.  I. 

in  the  summary  and  collateral  method  of  an  order  to  sur- 
render possession  to  a  receiver.1 

§  34.  Peril  to  the  fund  in  litigation  is  a  frequent  ground 
for  the  interference  of  equity  by  a  receiver,  when  the  dan- 
ger is  such  as  to  demand  the  summary  interference  of  the 
court  in  order  to  preserve  the  fund,  which  would  otherwise 
be  lost.  Thus,  upon  a  bill  to  restrain  the  infringement  of  a 
patent  right,  when  an  injunction  has  been  granted  pendente 
lite,  and  it  is  apparent  that  if  plaintiff's  rights  are  ultimately 
established  he  will  be  entitled  to  a  large  share  of  the  money 
received  by  defendants  from  sales  of  the  patented  machines, 
and  defendants  are  shown  to  be  in  insolvent  circumstances, 
and  to  have  debts  due  them  to  a  large  amount  for  machines 
sold  since  the  granting  of  the  injunction,  sufficient  danger 
to  the  fund  is  shown  to  warrant  the  court  in  appointing  a 
receiver.2 

§  35.  As  a  general  rule,  where  the  object  of  the  action 
is  only  to  compel  payment  of  a  sum  of  money,  the  courts 
will  not  appoint  a  receiver  upon  the  filing  of  the  bill.3  And 
in  an  ordinary  action  for  money  had  and  received  by  de- 
fendant to  the  use  of  plaintiff,  it  is  not  proper  to  allow  a 
receiver  when  there  is  no  allegation  or  pretense  that  the 
money  is  in  danger  of  being  lost,  or  that  it  will  be  in  jeop- 
ardy during  the  pendency  of  the  action  unless  a  receiver  is 
appointed.4  But  when  one  has  received  subscriptions  to  a 
given  project,  depositing  the  funds  with  third  parties,  and 
the  project  is  abandoned,  a  subscriber  electing  to  withdraAv 
his  subscription  is  entitled,  in  an  action  against  the  different 
parties,  to  have  a  receiver  of  the  fund  in  controversy.  And 
it  is  not  a  sufficient  objection  to  the  relief,  in  such  case,  that 
a  receiver  of  the  fund  has  been  appointed  in  a  previous  ac- 
tion of  the  same  nature ;  but  the  powers  and  functions  of 

i  Levi  v.  Karrick,  13  Iowa,  344.  4  O'Mahoney  v.  Belmont,  62  N. 

2Parkhurstu.Kinsman,2Blatchf.,  Y.,  133,  affirming  S.  C,  37  N.  Y. 
78.  Supr.  Ct.  R.,  223. 

3  Hager  v.  Stevens,  2  Halst.  Ch., 
374. 


CHAP.  I.]  GENEEAL  FEATURES. 


35 


the  second  receiver  will  be  made  subordinate  to  those  cf 
the  first,  and  when  the  first  becomes  functus  officio,  the 
second  will  become  entitled  to  the  custody  of  the  fund,  or 
of  so  much  thereof  as  remains.1  But  this  doctrine  is  to  be 
accepted  with  the  limitation  that  the  subsequent  receiver 
takes  only  what  is  undisposed  of  by  the  court  in  the  former 
litigation.2 

§  36.  "While  it  is  sometimes  necessary  for  the  court,  by 
its  receiver,  to  continue  the  management  of  the  business 
over  which  the  receiver  is  appointed,  for  the  purpose  of 
effecting  a  more  satisfactory  adjustment  and  for  better 
protecting  the  interests  of  all  parties,  yet  the  courts  are 
generally  averse  to  assuming  the  management  of  a  business 
except  as  incidental  to  the  object  of  the  suit,  and  for  the 
purpose  of  closing  it  up  and  dividing  the  proceeds.  And  a 
receiver  will  not  be  apjjpinted  to  continue  the  management 
of  a  business  which,  from  its  nature,  can  not  be  conducted 
under  the  direction  of  the  court,  as  in  the  case  of  a  theater.3 
Nor  will  a  receiver  be  authorized  to  begin  a  business  which 
has  not  yet  been  undertaken  by  the  parties,  such  as  the 
manuf actitre  and  sale  of  medicines  under  letters  patent ;  nor 
will  the  court  require  the  parties,  in  such  case,  to  disclose 
to  the  receiver  secrets  concerning  the  manufacture  of  such 
medicines.4 

§  37.  Where  parties  to  the  action  are  before  the  court 
upon  the  appointment  of  a  receiver,  and  have  a  right  to 
object  to  the  order  of  the  court,  or  to  appeal  therefrom,  but 
submit  to  the  order  without  objection  and  without  subse- 
quently appealing,  their  submission  will  be  deemed  an  ac- 
quiescence in  the  order,  so  far  as  to  render  it  the  law  of  the 
case  with  respect  to  the  right  to  a  receiver.  Such  persons 
can  not,  therefore,  call  in  question  the  propriety  of  the  ap- 

i  Bailey  v.  O'Mahony,  33  N.  Y.  133,  affirming  S.  C,  37  N.  Y.  Supr. 
Supr.  Ct.  R.,  239.  Ct.  R.,  223. 

2  O'Mahoney  v.  Belmont,  62  N.  Y.,        3  Waters  v.  Taylor,  15  Ves.,  10. 

«  Merrell  v.  Pemberton,  62  Ga.,  29. 


3G  RECEIVERS.  [CHAP.  I. 

pointnieiit  upon  a  final  application  for  a  disposal  of  the 
funds  in  the  receiver's  hands.1 

§  38.  From  the  nature  of  a  receiver's  duties,  and  his 
attitude  and  relation  toward  the  court  as  its  representative 
or  officer,  he  is  held  to  a  strict  accountability  for  the  faithful 
performance  of  the  trust  reposed  in  him.  Especially  is  this 
the  case  when  his  position  and  duties  with  reference  to  the 
property  or  trust  confided  to  him  as  receiver  are  in  any 
degree  inconsistent  with  other  interests  which  he  has  in  the 
same  property ;  and  in  such  case  the  court  will  scrutinize 
his  conduct  with  extreme  care,  and  will  hold  him  to  a  strict 
performance  of  his  duties.2 

§  39.  It  has  been  held  that  the  appointment  of  a  receiver 
is  not  necessarily  a  judicial  act  in  all  cases,  in  the  sense  that 
it  must  be  made  only  by  the  courts.  And  the  right  of  the 
legislature  of  a  state  to  enact  a  law,  authorizing  the  gov- 
ernor of  the  state  to  appoint  a  receiver  of  an  insolvent 
banking  corporation,  is  not  a  violation  of  the  constitutional 
provision  limiting  each  department  of  the  government  to  its 
own  particular  sphere ;  the  appointment  of  a  receiver  under 
such  law  being  in  no  manner  a  decree  or  judgment  affecting 
title  to  property,  and  not  being  a  final  determination  of  any 
rights,  either  legal  or  equitable.3 

i  Post  v.  Dorr,  4  Edw.  Ch.,  412.  3  Carey  v.  Giles,  9  Ga.,  253. 

2BoUes  v,  Duff,  54  Barb.,  215;  S. 
C,  37  How.  Pr.,  162. 


CHAPTEK  II. 

OF  THE  COURTS  EXERCISING  THE  JURISDICTION. 

1  What  Courts  May  Appoint  Receivers, §  40 

H.  Relative  Powers  of  State  and  Federal  Courts,    ...       50 

I.  What  Courts  May  Appoint  Keceiyees. 

§  40.     English  and  Irish  Courts  of  Chancery. 

41.  Courts  granting  the  relief  in  this  country;  original  jurisdiction; 

courts  of  last  resort. 

42.  Jurisdiction  not  exerc/sed  by  probate  courts. 

43.  Power  limited  to  particular  court,  must  be  followed  strictly 

44.  Receivers  over  property  in  foreign  state  or  country. 

45.  Receiver  in  aid  of  decree  of  foreign  court. 

46.  Receivers  pending  litigation  concerning  probate  or  administra- 

tion. 

47.  Authority  of  i-eceiver  co-extensive  only  with  that  of  court ;  no 

extraterritorial  powers,  except  by  state  comity. 

48.  Court  first  appointing  acquires  control ;  receiver  not  subject  to 

order  of  other  court. 

49.  New  York  code  of  procedure ;  court  first  moving  has  exclusive 

control. 

§  40.  The  jurisdiction  exercised  in  the  appointment  of 
receivers  has  always  been  treated  as  a  purely  equitable  one, 
and  the  remedy  has  been  generally  regarded,  next  to  that 
by  injunction,  as  the  most  efficient  and  salutary  of  the  ex- 
traordinary remedies  known  to  courts  of  equity.  Finding 
its  origin  in  the  English  Court  of  Chancery,  it  wTas,  until  the 
recent  abolition  of  that  court  as  a  distinct  tribunal,  always 
regarded  as  one  of  its  most  efficient  remedies,  although 
granted  with  caution  and  only  upon  a  satisfactory  showing 
of  the  necessity  for.the  immediate  interposition  of  the  court. 
It  has  also  been  a  favorite  remedy  of  the  Irish  Court  of 


38  EECEIVEES.  [CHAP.  II. 

Chancery,  whose  decisions  afford  an  exceedingly  instructive 
presentation  of  the  principles  underlying  the  jurisdiction, 
and  of  the  conditions  necessary  to  justify  its  exercise. 

§  41.     In  those  states  of  this  country  which  have  preserved 
a  distinct  chancery  system,   the   relief  has  always  been 
granted  by  the  chancery  courts,  which  have  adopted  and 
followed  the  general  principles  governing  the  remedy  under 
the  English  system,  enlarging  and  shaping  the  jurisdiction 
to  adapt  it  to  the  different  conditions  in  this  country.     In 
the  states  which  have  blended  the  systems  of  equity  and 
law,  or  which  have  adopted  codes  of  procedure,  relief  by 
receivers  is  generally  granted  by  the  various  courts  of  gen- 
eral jurisdiction  throughout  the  states.     By  whatever  name 
these  courts  are  known,  the  jurisdiction  has  preserved  its 
distinctive  equitable  character,  and  is  still  exercised  upon 
the  same  general  principles  of  equity  by  which  it  was  gov- 
erned before  the  adoption  of  the  various  codes  of  procedure. 
It  is  also  strictly  an  original  in  distinction  from  an  appellate 
power,  and  is  generally  exercised  by  courts  of  original  juris- 
diction only.     In  Tennessee,  however,  it  would  seem  that 
the   supreme  court  of  the  state  may,  pending  an  appeal 
thereto  from  an  inferior  court,  appoint  a  receiver  to  take 
charge  of  the  subject-matter  of  litigation,  in  a  case  other- 
wise appropriate  for  the  relief.1    But  while  that  court  has 
power  to  appoint  a  receiver  when  necessary  to  the  proper 
administration  of  its  appellate  jurisdiction,  yet  to  warrant 
the  exercise  of  the  power  the  property  in  controversy  must 
be  first  brought  under  the  jurisdiction   of  that  court  by 
virtue  of  an  appeal,  or  of  some  order  or  decree  of  the  court, 
and  the  person  against  whom  the  receiver  is  sought  must  be 
subject  to  its  jurisdiction.2    And  the  supreme  court  of  the 
United  States  has  refused  in  a  particular  case  to  appoint  a 
receiver  over  the  property  of  a  railway  pending  an  appeal 
from  a  decree  of  foreclosure,  but  without  deciding  whether 

i  West  v.  Weaver,  3  Heisk.,  589.    And  see  Allen  v.  Harris,  4  Lea, 
2  Kerr  v.  White,  7  Baxter,  394.     190. 


CHAP.  II.]  COURTS. 


39 


a  case  might  not  arise  in  which  the  power  might  be  exer- 
cised pending  an  appeal.1 

§  42.  The  appointment  of  receivers  being  a  power  per- 
taining to  courts  which  are  vested  with  chancery  jurisdic- 
tion, a  court  of  probate  powers  only  can  not  appoint  a 
receiver  in  aid  of  the  collection  of  the  estate  of  a  deceased 
person.2  Where,  however,  a  probate  or  county  court,  under 
the  code  of  procedure  of  the  state,  is  empowered  to  hear 
and  determine  civil  causes,  and  such  court  has  rendered 
judgment  against  a  debtor  in  a  case  properly  falling  within 
its  jurisdiction,  it  may  appoint  a  receiver  upon  proceedings 
supplemental  to  execution  in  the  nature  of  a  creditor's  bill 
to  enforce  the  judgment.3 

§  43.  Where,  under  the  laws  of  a  state,  the  power  of  ap- 
pointing receivers  is  confined  to  the  chancellor  alone,  and 
the  register  of  court  is  specially  prohibited  from  making  the 
appointment,  an  order  of  court  referring  the  appointment 
to  the  register  is  not  simply  error  in  a  case  within  his  juris- 
diction, but  is  the  exercise  of  a  power  clearly  beyond  his 
control,  and  is  therefore  utterly  void.  And  it  is  proper  for 
the  supreme  court  of  the  state  to  correct  such  unauthorized 
action  on  the  part  of  the  chancellor  by  the  writ  of  prohibi- 
tion.4 So  where  a  statute  authorizes  the  appointment  of  a 
receiver  and  the  approval  of  his  bond  by  the  court,  but  not 
by  the  judge  or  clerk  in  vacation,  the  appointment  must  be 
made  by  the  judge  in  term  time,  and  not  in  vacation,  and  an 
appointment  by  the  judge  in  vacation  and  the  approval  of 
the  bond  by  the  clerk  will  be  held  invalid.5 

§  44.  It  would  seem  to  be  unnecessary  that  the  property 
constituting  the  subject-matter  of  litigation  should  be  within 
the  jurisdiction  of  the  court,  provided  the  parties  in  interest 
are  subject  to  its  control,  and  there  are  frequent  instances 

1  Pacific  Railroad  v.  Ketchum,  95        4  Ex  parte  Smith,  23  Ala.,  94. 

U.  S.,  1.  5  Newman  v.  Hammond,  46  Ind., 

2  Scott  v.  Searles.  13  Miss.,  25.  119. 

3  Second  Ward  Bank  v.  Upmaun, 
12  Wis.,  499. 


40  RECEIVERS.  [CHAP.  II. 

where  the  English  Court  of  Chancery  has  appointed  receivers 
over  estates  or  property  situated  in  foreign  countries.1  In 
such  cases  it  would  seem  to  be  the  better  practice  that  the 
receiver  himself  should  be  within  the  jurisdiction  of  the 
court,  and  that  he  should  be  allowed  to  appoint  his  own 
agent  in  the  foreign  country  for  the  management  of  the 
property  there.2  It  is  to  be  observed,  however,  that  while 
the  power  of  courts  of  equity  to  extend  their  extraordinary 
aid  over  property  in  a  foreign  country  is  thus  clearly  recog- 
nized, it  will  not  be  exercised  when  the  parties  in  interest  in 
the  property,  or  representing  it,  are  not  before  the  court  or 
subject  to  its  control.3  And  a  receiver  will  not  be  appointed 
as  against  a  purchaser  of  the  interest  of  one  partner,  residing 
and  conducting  the  business  in  another  state.4  But  the  fact 
that  the  property  over  which  a  receiver  is  sought  is  located 
partly  in  one  state  and  partly  in  another,  as  in  the  case  of  a 
railway  corporation  whose  line  extends  through  two  differ- 
ent states,  the  company  being  incorporated  in  both,  will  not 
prevent  the  courts  of  one  of  the  states  from  appointing  a 
receiver  to  take  charge  of  the  railway,  in  a  case  otherwise 
appropriate  for  the  relief.5 

§  45.  It  is  held  to  be  competent  for  a  court  of  chancery 
in  one  country  to  appoint  a  receiver  and  grant  an  injunc- 
tion in  aid  of  the  enforcement  of  a  decree  in  chancery  in  a 
foreign  country.6  The  power,  however,  will  not  be  exer- 
cised in  such  a  case  when  it  is  doubtful,  upon  the  record, 
whether  plaintiffs  will  ultimately  be  entitled  to  a  decree  in 
the  second  action.7 

§  46.  Under  the  practice  of  the  English  Court  of  Chan- 
cery, receivers  were  frequently  appointed  pending  a  litigation 

'See  Davis  v.  Barrett,   13  L.  J.,  •»  Harvey  v.  Varney,  104  Mass., 

N.  S.  Ch.,  304;  Langford  v.  Lang-  436. 

ford,  5  L.  J.,  N.  S.  Ch.,  60;  Shop-  5  state  v.  Northern  Central  E.  Co. , 
pard  v.  Oxenford,  1  Kay  &  J.,  491 ;  18  Md.,  193. 
v.  Lindsey,  15  Ves.,  91.  «  Houlditch  v.  Lord  Donegal,  8 

2 v,  Lindsey,  15  Ves.,  91.  Bligh,  N.  S.,  301. 

3  Shaw  v.  Shore,  5  L.  J.,  N.  S.  7  Houlditch    v.    Lord    Donegal, 

Ch.,  79.  Beat.,  146. 


CHAP.  II.]  COURTS.  41 

in  the  ecclesiastical  court  over  the  probate  of  a  will,  or  the 
right  to  administer  an  estate.     The  relief  was  granted  in 
this  class  of  cases,  not  because  of  the  contest  in  another 
court,  but  because  there  was  no  person  to  receive  the  assets, 
and  it  was  therefore  the  duty  of  a  court  of  equity  to  lend 
its  aid  for  the  preservation  of  the  assets  pending  the  litiga- 
tion.1    The  court,  however,  was  averse  to  interfering  by  a 
receiver  with  the  person  in  possession  under  the  will,  when 
the  property  was  of  small  value.2     And  in  a  contest  be- 
tween two  different  executors,  claiming  under  two  different 
wills  of  the  deceased,  a  receiver  would  not  be  extended 
over  the  rents  and  profits  of  real  estate  held  by  a  defendant 
claiming  under  a  title  adverse  to  both  wills.3    And  since 
the  power  was  exercised  only  for  the  preservation  of  the 
property,  a  receiver  would  not  be  appointed  when  no  dan- 
ger was  shown,  and  no  jfeason  why  the  plaintiff  could  not 
have  administration  pendente  lite,  to  secure  and  preserve  the 
property.4    Where,  however,  the  bill  showed  a  gross  case  of 
fraud  on  the  part  of  defendants  contesting  a  will  in  the 
ecclesiastical  court,  and  that  the  whole  object  of  the  litiga- 
tion in  that  tribunal  was  to  dela}^  probate  of  the  will,  equity 
would  take  jurisdiction   and  appoint  a  receiver  over  the 
estate,  notwithstanding  the  power  of  the  ecclesiastical  court 
to  appoint  an  administrator  pendente  lite.5    But  an  act  of 
parliament  having  authorized  the  ecclesiastical  court,  pend- 
ing a  litigation  as  to  the  probate  of  a  will,  when  there  was 
some  obstacle  or  bar  in  the  way  of  administration,  to  ap- 
point an  administrator  pendente  lite,  with  full  powers  in 
the  management  of  the  property,  except  as  to  distributing 
the  residue,  and  such  administrator  having  been  appointed 

i  Watkins  v.  Brent,  1  Myl.  &  Ci\,  3  Jones  v.  Goodrich,  10  Sim.,  oST. 

97;  Marr  v.  Littlewood,  2  Myl.  &  4  Richards  v.  Chave,  12  Ves.,  462; 

Cr.,  454.  See,  also,  Atkinson  v.  Hen-  Knight  v.  Duplessis,  1  Ves.,  824. 

shaw,  2  Ves.  &  Bea.,  85;  Ball  v.  » Atkinson  v.  Henshaw,  2  Ves.  & 

Oliver,  id.,  915;  Parkin  v.  Seddons,  Bea.,  85.     See,  also,  Ball  v.  Oliver. 

L.  R.,  16  Eq.,  34.  id.,  96. 

-  Whitworth  v.  Whyddon,  2  Mac. 
&  G.,  52. 


42  KEOEIVEBS.  [CHAP.  II. 

by  that  court,  equity  would  refuse  to  appoint  a  receiver, 
since  the  only  effect  of  the  appointment  would  be  to  pro- 
duce an  unseemly  conflict  between  the  two  courts.1  If, 
however,  the  ecclesiastical  court  had  not  yet  exercised  its 
power  by  appointing  an  administrator  pendente  lite,  it  was 
held  that  equity  might  interfere  as  before  the  statute,  in  a 
proper  case,  and  might  appoint  a  receiver  of  the  personal 
estate,  when  probate  of  the  will  had  been  delayed.2 

§  47.  Questions  of  much  nicety  have  sometimes  arisen  in 
this  country  as  to  the  extent  to  which  the  courts  of  one 
state  will  recognize  the  functions  and  powers  of  a  receiver 
appointed  in  another  state,  and  as  to  the  right  of  such  re- 
ceivers to  act  beyond  the  territorial  jurisdiction  of  the  court 
appointing  them.  The  better  doctrine  upon  this  subject 
undoubtedly  is  that  the  legal  authority  of  a  receiver  is  co- 
extensive only  with  the  jurisdiction  of  the  court  appointing 
him,  and  that  as  a  matter  of  strict  right  the  courts  of  one 
state  are  not  bound  to  recognize  a  receiver  appointed  in  a 
foreign  state.  The  rule  is  founded  upon  the  recognized  prin- 
ciple that  the  laws  of  one  state  have  no  force,  projyrio  vig- 
ore,  beyond  the  territorial  limits  of  such  state,  although, 
upon  considerations  of  courtesy  or  comity,  they  may  be 
permitted  to  operate  in  another  state  for  the  promotion  of 
justice,  when  neither  the  latter  state  nor  its  citizens  will 
suffer  any  inconvenience  from  the  application  of  the  foreign 
law.  The  question,  then,  becomes  one  of  comity  between 
the  different  states,  and  it  is  upon  such  considerations  alone 
that  the  courts  of  one  state  may  recognize  and  enforce  the 
acts  of  a  receiver  appointed  in  another  state,  when  no  detri- 
ment is  thereby  caused  to  the  citizens  of  the  state  in  which 
the  functions  of  the  foreign  receiver  are  asserted.3    Thus, 

i  Veret  v.  Duprez,  L.  R.,  6  Eq.,  litts  v.  Waite,  25  N.  Y.,  577;  Taylor 

029.    See,  also,  Hitchen  v.  Birks,  v.    Columbian   Insurance    Co.,   14 

L.  R.,  10  Eq.,  471.  Allen,  353;  Hunt  v.  Columbian  In- 

2  Parkin  v.  Seddons,  L.  R.,  16  surance  Co.,  55  Me.,  290.  See  Hoy t 
Eq.,  34.  v.  Thompson's  Executor,  19  N.  Y., 

3  Hoy  t  v.  Thompson,  5  N.  Y. ,  320,  207. 
reversing  S.  C,  3Sandf.,  416;  Wil- 


CHAP.  II.] 


C0UKTS. 


43 


a  receiver  of  an  insolvent  corporation  appointed  under  the 
laws  of  New  Jersey,  with  power  to  take  possession  of  all 
the  effects  of  the  corporation,  and  to  convey  or  assign  all 
its  property,  real  and  personal,  may  assign  an  indebtedness 
due  to  the  corporation  from  a  citizen  of  New  York ;  and 
the  courts  of  the  latter  state  may  recognize  such  assignment 
as  giving  to  the  purchaser  an  equitable  right  of  action, 
which  they  will  enforce  as  against  the  debtor,  the  rights  of 
citizens  of  New  York  not  intervening.1  Where,  however, 
citizens  of  a  state,  who  are  creditors  of  a  foreign  corpora- 
tion, have  instituted  proceedings  in  attachment  against  the 
corporation,  and  acquired  liens  upon  its  property  in  the  state 
of  their  residence,  receivers  of  the  corporation,  appointed 
in  the  foreign  state,  will  not  be  allowed  to  deprive  such 
creditors  of  their  rights,  and  the  courts  will  protect  the  lien 
acquired  by  their  own  citizens,  in  preference  to  the  claim  or 
right  asserted  by  the  foreign  receivers.2 


i  Hoyt  v.  Thompson,  5  N.  Y.,  320, 
reversing  S.  C. ,  3  Sandf .  .416.  "It 
is  a  conceded  principle,"  says  Rug- 
gles,  C.  J.,  "  that  the  laws  of  a  state 
have  no  force,  proprio  vigore,  be- 
yond its  territorial  limits.  But  the 
laws  of  one  state  are  frequently 
permitted,  by  the  courtesy  of  an- 
other, to  operate  in  the  latter  for 
the  promotion  of  justice,  where 
neither  that  state  nor  its  citizens 
will  suffer  any  inconvenience  from 
the  application  of  the  foreign  law. 
This  courtesy  or  comity  is  estab- 
lished not  only  from  motives  of  re- 
spect for  the  laws  and  institutions 
of  foreign  countries,  but  from  con- 
siderations of  mutual  utility  and 
advantage." 

2  Willitts  v.  Waite,  25  N.  Y.,  577 ; 
Taylor  v.  Columbian  Insurance 
Company,  14  Allen,  353;  Hunt  v. 
Columbian  Insurance  Company,  55 
Me.,  290.     The  observations  of  Mr. 


Justice  Barrow,   in  the  case    last 
cited,  very  clearly  illustrate  the  dis- 
tinction noticed,  as  well  as  the  prin- 
ciples on  which  it  is  founded.     He 
says,  p.  297:     "The  receivers,  who 
assert  this  claim  here,  are  merely 
the  servants  of  the  court  in  New 
York,  having  legal  authority  co- 
extensive  only   with  the  jurisdic- 
tion of  the  court  by  whom  they 
were  appointed.     Upon  principles 
of    comity,    often  recognized  and 
always  acted  on,  except  when  they 
come  in  conflict  with  paramount 
rights  of  suitors  in  our  courts,  they 
might  be  admitted  here  to  protect 
the  interests  and  enforce  the  claims 
of  the  corporation,  of  whose  affairs 
they  are  the  legal  guardians  there. 
But  equity  does  not  require  us  to 
permit  the  exercise  of  such  privi- 
leges to  the  detriment  of  our  own 
citizens,  who  are  pursuing  appro- 
priate legal  remedies  in  this  court." 


44:  RECEIVERS.  [CHAP.  II. 

§  48.     As  between  different  courts  appointing  the  same 
person  receiver  in  different  actions,  it  is  held  that  the  court 
first  appointing  him  acquires  exclusive  control  over  the  fund 
and  the  receiver  holding  it,  and  it  will  not  permit  such  con- 
trol to  be  interfered  with  by  the  subsequent  appointment  of 
the  same  person  in  another  cause,  but  will  in  the  exercise  of 
its  powers  proceed  to  disburse  the  fund  as  may  be  proper.1 
Indeed,  when  a  court   of  competent   jurisdiction  has   ap- 
pointed a  receiver,  who  is  in  possession  of  and  administering 
the  property  under  its  orders,  another  court  of  co-ordinate 
jurisdiction  will  not  entertain  a  bill  to  administer  the  same 
property,  and  to  take  it  from  the  possession  of  the  former 
receiver,  and  to  appoint  its  own  receiver.     In  such  a  case, 
the  parties  aggrieved  should  seek  relief  in  the  court  which 
is  already  in  possession  of  the  property  through  its  receiver.2 
So  the  prior  jurisdiction  of  a  court  of  equity  powers  over 
the  subject-matter  of  the  appointment  of  a  receiver,  and  the 
pendency  of  a  motion  for  an  injunction  and  a  receiver  in 
such  court,  exclude  the  interference  of  that  court  in  a  subse- 
quent suit  for  the  same  relief.     And  the  appointment  of  a 
receiver  in  the  suit  thus  subsequently  begun  will  be  held 
inoperative  as  against  the  appointment  made  in  the  former 
cause.3    And  a  receiver  being  an  officer  of  court,  and  being 
bound  to  account  to  the  court  appointing  him  for  all  funds 
which  he  receives  in  his  official  capacity,  he  can  not  be  com- 
pelled by  an  order  of  another  court  to  pay  over  money  in 
his  hands  as  receiver  in  satisfaction  of  an  execution  issued 
upon  a  judgment  of  such  other  court,  since  such  a  proced- 
ure would  necessarily  have  the  effect  of  producing  a  conflict 
of  jurisdiction,  and  would  prevent  the  receiver  from  com- 
pliance with  the  obligations  of  his  bond  given  to  the  court 
appointing  him.4 

§  49.     Under  the  New  York  code  of  procedure,  the  ap- 

i  O'Mahony  v.  Belmont,  37  N.  Y.  3  Young   v.    Eollins,    85   N.   C, 

Supr.  Ct.  R.,  380.  485. 

2  Young  v.  M.   &  E.   R.   Co.,   2  4  Nelson  v.  Conner,  6  Rob.  (La.). 

Woods,  606.  339. 


CHAP.  II.]  COURTS.  45 

pointment  of  a  receiver,  like  the  granting  of  an  injunction, 
is  considered  as  one  of  the  provisional  remedies  of  the 
courts,  the  two  remedies  being  regarded  as  of  equal  weight 
and  importance.  And  since  the  courts  of  that  state,  under 
the  code,  are  regarded  as  having  acquired  jurisdiction  of  a 
cause,  and  as  having  control  of  all  the  subsequent  proceed- 
ings, from  the  time  of  service  of  process,  or  the  allowance 
of  a  provisional  remedy,  the  granting  of  an  injunction  by  a 
court  of  competent  jurisdiction  is  a  bar  to  appointing  a  re- 
ceiver in  a  subsequent  proceeding  between  the  same  parties 
in  another  court;  and  the  court  first  moving  having  ac- 
quired control  by  the  granting  of  an  injunction,  the  second 
court  will  decline  to  interfere  by  a  receiver,  or  to  take  juris- 
diction of  the  cause.1 

i  McCarthy  v.  Peake,  18  Ho\^  Pi\,  138;  S.  C,  9  Ab.  Pr.,  164. 


46  RECEIVERS.  [CHAP.  II. 


II.  Relative  Powers  of  State  and  Federal  Courts. 

§  50.     Court  first  acquiring  control  will  retain  it. 

51.  Proceedings  in  bankruptcy ;  state  courts  assert  exclusive  jurisdic- 

tion, if  first  acquired. 

52.  Jurisdiction  of  state  courts,  if  first  acquired,  recognized  by  United 

States  courts. 

53.  Contrary  doctrine  asserted  by  United  States  courts. 

54.  The  general  doctrine  applied  to  cases  of  railway  mortgages. 

55.  Bill  for  account  not  entertained  by  United  States  court  against 

receiver  of  state  court. 

56.  "When  bill  for  receiver  by  one  partner  in  state  court  an  act  of 

bankruptcy. 

57.  Receiver  in  behalf  of  assignee  in  bankruptcy  of  a  copartnership. 

58.  Conflict  between  state  and  federal  court  ground  for  a  receiver. 

59.  Receiver  of  railway  appointed  by  United  States  court  not  subject 

to  control  of  state  court. 

60.  The  same ;  Wisconsin  doctrine. 

Gl.     State  court  will  not  grant  writ  of  assistance  against  receiver  of 

United  States  court. 
62.    Right  of  action  of  receiver  of  United  States  court  no  greater  than 

of  state  court. 

§  50.  Questions  of  considerable  delicacy  and  importance 
have  frequently  arisen  under  our  peculiar  judicial  system, 
touching  the  relative  powers  of  the  state  and  federal  courts 
in  the  appointment  of  receivers  over  the  same  subject- 
matter  in  litigation  in  both  tribunals.  These  questions  have 
usually  been  determined  upon  principles  of  comity,  and  it 
is  now  the  established  doctrine  of  both  the  state  and  federal 
courts,  that  that  court,  whether  state  or  federal,  which  first 
acquires  jurisdiction  of  the  subject-matter,  or  of  the  res, 
and  which  is  first  put  in  motion,  will  retain  its  control  to 
the  end  of  the  controversy,  and  the  possession  of  its  receiver 
will  not  be  disturbed  by  the  subsequent  appointment  of  a 
receiver  by  the  other  court.1    ISTor  is  it  necessary,  in  the  ap- 

1  Keep  v.  Michigan  Lake  Shore  R.  Albany,  etc.,  R.  Co.,  2  Biss.,  390; 

Co.,  U.  S.  Circuit  Court,  Western  Union  Trust  Co.  v.  The  Rockford, 

District   of    Michigan,  6    Chicago  Rock  Island  &  St.  Louis  R.  Co.,  U. 

Legal   News,    101 ;    Bill    v.    New  S.  Circuit  Court,  Northern  District 


CHAP.  II.] 


COUETS. 


47 


plication  of  the  general  doctrine  here  stated,  that  the  court 
asserting  its  exclusive  control  by  reason  of  having  been  first 
to  take  cognizance  of  the  subject-matter,  should  be  the  first 
to  take  actual  possession  of  the  property  by  its  receiver.1 
And  where,  subsequent  to  the  filing  of  a  bill  for  a  receiver 
in  a  creditor's  suit  in  a  federal  court,  but  before  the  ap- 
pointment in  that  court,  a  bill  is  filed  and  a  receiver  is 
appointed  in  a  state  court,  the  federal  tribunal  will  refuse 
to  recognize  the  receiver  of  the  state  court,  or  to  rescind  its 
own  appointment,  even  though  the  bill  as  originally  filed  in 
the  federal  court  was  imperfect,  and  was  amended  subse- 
quent to  the  appointment  of  the  receiver  by  the  state  court.2 


of  Illinois,  7  Chicago  Legal  News, 
33 ;  Gaylord  v.  Fort  Wayne.  Muncie 
&  Cincinnati  R.  Co.,  U.  S.  Circuit 
Court,  District  of  Indiana,  unre- 
ported, decided  by  Drummond,  J., 
1875 ;  Sedgwick  v.  Menck,  6  Blatchf ., 
156;  S.  C,  1  Bank.  Reg.,  Second 
Edition,  675;  Alden  v.  Boston, 
Hartford  &  Erie  R.  Co.,  5  Bank. 
Reg.,  230;  Storm  v.  Waddell,  2 
Sandf.  Ch.,  494;  Watkins  v.  Pink- 
ney,  3  Edw.  Ch.,  533;  Spinning  v. 
Ohio  Life  Insurance  &  Trust  Co.,  2 
Disney,  336;  Hutchinson  v.  Green, 
6  Fed.  Rep.,  833;  May  v.  Printup, 
59  Ga.,  129.  And  see  Beecher  v. 
Bininger,  7  Blatchf.,  170;  In  re 
Clark  and  Bininger,  4  Benedict,  88 ; 
Eisenmann  v.  Thill,  1  Cincinnati 
Sup.  Ct.  R.,  188;  Conkling  v.  But- 
ler, 4  Biss.,  22;  Bruce  v.  M.  &  K. 
R.  R.,  19  Fed.  Rep.,  342.  But  see 
Merchants'  &  Planters'  National 
Bank  v.  Trustees,  63  Ga.,  549.  And 
in  South  Carolina  R.  Co.  v.  People's 
Saving  Institution,  64  Ga.,  18,  it  is 
"held  that  the  pendency  of  a  bill  in 
a  federal  court  in  another  state  to 
foreclose  a  railway  mortgage  and 
for  a  receiver  will  not  interfere 
with  the  operation  of  the  attach- 


ment laws,  when  the  attachments 
are  levied  before  a  receiver  is  ap- 
pointed in  the  former  suit. 

»  Union  Trust  Co.  v.  The  Rock- 
ford,  Rock  Island  &  St.  Louis  R. 
Co.,  U.  S.  Circuit  Court,  Northern 
District  of  Illinois,  7  Chicago  Legal 
News,  33 ;  Gaylord  v.  Fort  Wayne, 
Muncie  &  Cincinnati  R.  Co.,  infra. 

2  Gaylord  v.  Fort  Wayne,  Muncie 
&  Cincinnati  R.  Co.,  U.  S.  Circuit 
Court,  District  of  Indiana,  unre- 
ported, decided  by  Drummond,  J., 
1875.  "The  principle  upon  this 
subject,"  says  Drummond,  J.,  "is 
properly  stated  in  the  opinion  of 
the  circuit  court  of  the  northern 
district  of  Illinois,  in  the  case  of 
the  Rockford,  Rock  Island  &  St. 
Louis  Railroad  Company,  reported 
in  the  7th  Chicago  Legal  News,  33 : 
that  the  court  which  first  takes 
cognizance  of  the  controversy  is 
entitled  to  retain  jurisdiction  to  the 
end  of  the  litigation,  and  incident- 
ally to  take  the  possession  or  con- 
trol of  the  res,  the  subject-matter 
of  the  controversy,  to  the  exclusion 
of  all  interference  from  other 
courts  of  concurrent  jurisdiction; 
and  that  the  proper  application  of 


48 


RECEIVERS. 


[CHAP.  II. 


§  51.  The  doctrine  under  consideration  has  been  fre- 
quently applied  in  cases  where  proceedings  in  bankruptcy 
have  been  instituted  against  a  defendant  debtor  in  the 
United  States  courts,  subsequent  to  the  appointment  of  a 
receiver  over  the  debtor's  effects  in  a  state  tribunal,  and  in 
such  cases  the  state  courts  have  uniformly  insisted  on  main- 


this  principle  does  not  require  that 
the  court  which  first  takes  juris- 
diction of  the  controversy  shall 
also  first  take  the  actual  possession 
of  the  tiling  in  controversy.  Then 
the  question  is  as  to  the  application 
of  this  rule  or  principle  to  the  pres- 
ent case.  It  is  insisted  that  because 
the  bill  was  amended,  and,  between 
the  date  of  the  filing  of  the  bill 
and  the  amendment,  another  cred- 
itor instituted  a  suit  in  the  state 
court,  and  had  a  receiver  appointed 
who  took  possession,  therefore  this 
court  lost  jurisdiction  of  the  res, 
and  could  not  permit  imperfect 
allegations  to  be  amended,  and 
thereby  affect  the  assumed  right  of 
the  state  court  over  the  res.  The 
only  question  that  arises  in  this 
aspect  of  the  case  is  whether  the 
federal  court  had  jurisdiction;  if 
it  had,  then  the  principle  applies 
that  no  other  court  of  concurrent 
jurisdiction  could  interfere  with 
the  res,  which  was  the  subject- 
matter  of  the  controversy.  It  is  to 
be  presumed  that  each  court  would 
equally  protect  the  rights  of  the 
creditors  of  the  defendant.  The 
only  question  is,  wliich  court  has 
first  obtained  jurisdiction  and  has 
the  right  to  call  upon  creditors  to 
come  before  it  for  the  protection  of 
then  rights.  In  deciding  this  ques- 
tion we  have  to  lay  down  a  rule 
which  would  apply  to  both  courts, 
state  and  federal;  and  by  which 
we  would  be  bound  if  the  state 


court  first  obtained  jurisdiction  of 
the  res,  and  by  wliich  the  state 
courts  should  also  be  bound  when 
the  federal  court  first  obtained  ju- 
risdiction ;  and  we  are  not  prepared 
to  hold  that,  because  the  allega- 
tions in  the  bill  are  imperfectly . 
stated,  because  an  amendment  is 
made  to  the  bill,  that  thereby  the 
court  loses  jurisdiction  of  the  sub- 
ject-matter. All  amendments  ger- 
mane to  the  bill  and  allowed  by  the 
court  relate  back  to  the  time  when 
the  bill  was  filed,  and  are  consid- 
ered as  incorporated  in,  and  a  part 
of,  the  original  bill.  And  it  can  not 
affect  the  question  that  the  amend- 
ment asks  that  the  receiver  shall 
do  sometliing  else,  as  by  adopting 
a  change  in  the  manner  of  admin- 
istering the  assets.  We  think  that 
there  is  no  other  safe  rule  to  adopt 
in  our  mixed  system  of  state  and 
federal  jurisprudence,  than  to  hold 
that  the  court  which  first  obtains 
jurisdiction  of  the  controversy,  and 
thereby  of  the  res,  is  entitled  to  re- 
tain it  until  the  litigation  is  settled. 
"Where  a  bill  is  filed,  the  object  of 
which  is  to  obtain  payment  of  a 
judgment  out  of  the  assets  of  the 
defendant,  if  the  assets  are  with- 
drawn from  the  court  by  another 
court,  of  course  the  object  of  the 
bill  can  never  be  obtained :  there  is 
really  nothing  about  which  there 
can  be  litigation.  The  continuance, 
therefore,  of  a  suit  under  such  cir- 
cumstances would  be  useless.    The 


CHAP.  II.] 


COURTS. 


49 


taining  their  jurisdiction  and  disposing  of  the  assets.1  Thus, 
where  a  receiver  was  appointed  upon  a  judgment  creditors 
bill  in  a  state  court,  and  the  appointment  was  completed  and 
the  debtor's  property  vested  in  the  receiver,  but  the  debtor 
filed  his  petition  in  bankruptcy  subsequent  to  the  filing  of 
the  creditor's  bill,  and  was  adjudicated  a  bankrupt  subse- 


only  relief  that  the  party  could 
have  would  be  to  follow  the  prop- 
erty to  the  other  court.  Whether 
or  not  in  a  race  among  creditors 
against  an  insolvent  party,  where 
bills  are  filed  in  courts  of  concur- 
rent jurisdiction,  and  a  receiver  is 
asked  to  take  possession  of  the 
property,  the  receiver  who  first  ob- 
tains actual  possession,  without  re- 
gard to  the  time  when  the  court 
took  jurisdiction  of  the  case,  should 
retain  possession,  is  a  very  serious 
question.  It  was  held  by  the  cir- 
cuit court  of  the  northern  district 
of  Illinois,  in  the  case  already  re- 
ferred to,  that  it  was  not  material 
that  a  receiver  appointed  by  the 
state  court  had  first  taken  actual 
possession  of  the  property,  pro- 
vided the  federal  court  had  the 
prior  right  to  control  the  res.  We 
think  that  decision  was  right ;  oth- 
erwise, in  the  case  supposed,  when 
a  bill  is  filed  in  one  of  the  courts, 
and  an  application  made  for  the 
appointment  of  a  receiver,  and  the 
case  presented  to  the  court,  and  ar- 
gued and  considered  by  the  court, 
and  a  receiver  appointed,  at  any 
time  before  the  receiver  takes  act- 
ual possession  of  the  property,  an- 
other creditor  can  go  into  another 
court,  make  his  application,  have 
the  appointment  made,  and  the  re- 
ceiver take  possession  of  the  prop- 
erty. Tins  would  seem  to  be  in 
violation  of  the  principle  which 
has  been  so  often  sanctioned  by  the 


decisions,  that  that  court  which 
first  takes  cognizance  of  the  con- 
troversy, and  incidentally  of  the 
res,  has  the  right  to  proceed  and 
terminate  the  litigation.  This 
being  so,  it  becomes  simply  a  ques- 
tion of  jurisdiction,  not  a  question 
whether  or  not  the  case  of  the 
plaintiffs  is  perfectly  stated.  De- 
fects can  be  supplied,  and  the  ju- 
risdiction of  the  court  not  affected. 
Suppose  that,  upon  an  application 
to  a  court  of  equity  for  relief  by  a 
creditor  against  an  insolvent  estate, 
an  omission  were  made  in  the  bill 
that  an  execution  was  issued  and 
returned  nulla  bona;  if  the  fact 
were  so,  that  defect  might  be  sup- 
plied, and  it  would  not  affect  the 
right  of  the  court  to  proceed  and 
give  relief ;  so  with  the  omission  of 
any  other  allegation  not  affecting 
the  question  of  the  jurisdiction  of 
the  court  over  the  subject-matter. 
Of  course,  in  all  that  has  been  said 
it  is  assumed,  what  was  the  fact  in 
this  case,  that  the  bill  was  not  only 
filed  first  in  this  court,  but  that  the 
process  was  issued  and  duly  served 
upon  the  parties,  and  that  they 
were  in  court  subject  to  its  juris- 
diction before  any  proceeding  was 
instituted  in  the  state  court." 

i  Storm  v.  Waddell,  2  Sandf.  Ch, 
494;  Watkins  v.  Pinkney,  3  Edw. 
Ch. ,  533.  See,  also,  Eisenmann  v. 
Thill,  1  Cincinnati  Sup.  Ct.  R.,  188; 
Spinning  v.  Ohio  Life  Insurance 
and  Trust  Co.,  2  Disney,  336. 


50  RECEIVERS.  [CHAP.  II. 

quent  to  the  appointment  of  the  receiver,  it  was  held  that 
the  assignee  in  bankruptcy  took  only  such  interests  as  the 
debtor  had  when  the  assignee  was  appointed,  and  therefore 
took  the  debtor's  property  subject  to  the  Hen  acquired  by 
the  creditor's  suit ;  and  the  receiver  was,  therefore,  directed 
to  pay  the  funds  realized  from  the  property  to  the  plaintiff 
in  the  creditor's  suit,  rather  than  to  the  assignee  in  bank- 
ruptcy.1 So  where  a  receiver  had  been  appointed  in  a  cred- 
itor's suit,  and  after  the  filing  of  the  creditor's  bill  the 
defendant  debtors  filed  their  petition  in  bankruptcy  in  the 
federal  court,  it  was  held  that  the  jurisdiction  acquired  by 
the  latter  court  by  the  mere  filing  of  the  petition  did  not 
oust  the  previously  acquired  control  of  the  state  court  over 
the  debtors'  property,  and  that  it  was  at  liberty  to  go  on  and 
operate  upon  the  defendants  aud  their  property  until  it  be- 
came vested  by  assignment  in  their  assignee  in  bankruptcy. 
And  without  passing  upon  the  right  of  the  judgment  cred- 
itor in  the  state  court  to  ultimately  maintain  his  lien  upon 
the  debtors'  property,  as  against  the  assignee  to  be  subse- 
quently appointed  in  bankruptcy,  it  wa  s  held  that  defendants 
should  transfer  their  property  to  the  receiver,  notwithstand- 
ing the  filing  of  their  petition  in  bankruptcy.2     And  when 

1  Storm  v.  Waddell,  2  Sandf.  Ch.,  particular  judgment  creditor.  I 
494.  thought  proper,  as  it  was  somewhat 

2  Watkins  v.  Pinkney,  3  Edw.  a  novel  question,  to  confer  on  the 
Ch.,533.  This  was  a  motion  for  an  subject  with  the  learned  judge  of 
attachment  against  defendants  in  a  the  United  States  district  court,  in 
creditor's  bill,  for  refusing  to  exe-  order  to  ascertain  his  views  and  to 
cute  an  assignment  of  their  prop-  avoid  anything  like  collision  with 
erty  to  a  receiver,  the  grounds  of  the  United  States  courts  in  the 
refusal  being  that,  since  the  filing  exercise  of  then-  jurisdiction  under 
of  the  creditor's  bill,  defendants  the  bankrupt  law.  The  act  of  con- 
had  filed  their  petition  in  bank-  gress  becomes  the  paramount  law, 
ruptcy.  McCoun,  Vice-Chancellor,  to  which  this  court  is  bound  to  give 
says,  p.  534:  "The  question  is,  effect,  even  where  it  comes  in  con- 
whether  the  court  of  chancery,  tact  with  the  statute  of  the  state, 
under  such  circumstances,  will  pro-  The  ground  taken  by  the  defendant 
ceed  to  compel  a  transfer  and  de-  is,  that  the  moment  a  party  pre- 
livery  of  property  of  the  bankrupt  sents  his  petition  in  bankruptcy  to 
to  a  receiver,  for  the  benefit  of  a  a  court  of  the  United  States,  that 


CHAI\  II.] 


COURTS. 


51 


the  state  court  hasbeen  the  first  to  acquire  control  over  the 
subject-matter,  and  has  appointed  its  receiver,  who  has  taken 
charge  of  the  property  in  controversy,  a  receiver  subse- 
quently appointed   by  the  United   States  court   may   be 


moment  he  ousts  the  jurisdiction 
of  the  state  courts  over  him  and 
his  property,  and  gives  to  the 
United  States  courts  sole  and  entire 
jurisdiction  to  pass  what  property 
he  has  at  the  time  of  presenting  his 
petition,  to  the  assignee  to  be  ap- 
pointed under  the  act.  But  I  find 
that  the  judges  of  the  United  States 
courts  are  not  disposed  to  give  such 
an  effect  to  the  bankrupt  law,  be- 
cause it  is  in  the  power  of  the 
bankrupt  to  withdraw  his  petition ; 
and  if  he  could,  by  merely  present- 
ing his  petition,  defeat  the  state 
court,  he  could  at  any  time  after- 
wards withdraw  it,  and  thus  defeat 
the  operation  also  of  the  bankrupt 
law.  The  jurisdiction  which  the 
district  court  acquires  on  the  pres- 
entation of  a  bankrupt's  petition  is 
not,  therefore,  such  as  to  defeat 
proceedings  which  may  have  been 
commenced  against  him  in  this 
court  by  creditor's  bill  and  which 
is  pending  at  the  time  he  presents 
his  petition.  This  court  is  to  go  on 
and  operate  upon  the  defendant 
and  liis  property  until  such  time  as 
he  shall  make  Ins  assignment ;  and 
thus  vest  it  in  the  assignee  in  bank- 
ruptcy under  the  decree  of  the 
United  States  court.  This  proceed- 
ing is,  nevertheless,  subject  to  all 
questions  that  may  arise  under  the 
bankrupt  law,  between  the  receiver 
appointed  by  this  court  or  the  cred- 
itors prosecuting  here,  and  the  as- 
signee in  bankruptcy.  It  does  not 
follow,  from  anything  expressed  in 
the  act  of  congress,  that  the  pro- 


ceedings in  bankruptcy  are  to  inter- 
fere with  the  proceedings  in  rem 
against  a  debtor  in  the  state  courts. 
They  may,  therefore,  go  on  with- 
out being  considered  as  coming  in 
collision  with  the  United  States 
courts  under  the  bankrupt  law. 
But  after  the  debtor's  property  has 
been  passed  by  decree  to  the  as- 
signee in  bankruptcy,  this  assignee 
can  bring  an  action  against  the 
party  who  has  got  possession  of  the 
property  of  the  debtor  under  the 
proceedings  here,  and  the  question 
will  come  up  in  such  action,  or  by 
petition,  either  to  the  United  States 
court  or  to  this  court,  and  it  will 
then  be  determined  whether  the 
bankrupt  law  is  to  distribute,  or 
the  particular  creditor  is  to  have 
the  benefit  of  it.  In  the  English 
courts,  actions  are  very  frequently 
brought  by  assignees  of  bankrupts' 
estates  to  recover  property  which 
has  got  into  the  hands  of  a  cred- 
itor or  other  person  to  whom  the 
debtor  had  no  right  to  make  an 
assignment.  The  question  now  be- 
fore this  court  is  merely  one  in 
relation  to  the  manner  of  proceed- 
ing, and  whether  this  court  is  to 
withhold  its  jurisdiction  and  say, 
'  we  have  no  jurisdiction  in  the 
case ;  the  debtor  has  presented  his 
petition  to  a  court  of  the  United 
States,  and  we  have  no  further  ju- 
risdiction in  the  matter.'  It  re- 
mains, however,  yet  to  be  deter- 
mined whether  the  jurisdiction 
which  the  court  of  chancery  had 
is  taken  away.    And,  until  it  is  de- 


52  RECEIVERS.  [CHAP.  IT. 

punished  for  contempt  if  he  interferes  with  the  receiver 
previously  appointed  by  the  state  court.1 

§  52.  The  federal  courts  have  generally  recognized  the 
doctrine  under  discussion,  and  have  almost  uniformly  con- 
ceded the  jurisdiction  of  the  state  tribunals  when  the  latter 
have  first  acquired  control  over  the  subject-matter  and  the 
parties,  or  when  the  receiver  of  the  state  court  has  first 
acquired  possession  of  the  assets,  even  when  the  conflict  of 
jurisdiction  has  been  presented  to  the  United  States  court 
in  the  course  of  proceedings  in  bankruptcy  there.  And  the 
undoubted  weight  of  authority  in  the  federal  courts  sup- 
ports the  proposition  that  when  the  state  courts  have  prop- 
erly acquired  control  over  the  subject-matter  in  controversy, 
and  have  appointed  receivers  who  are  in  possession  of  the 
property  or  fund  at  the  time  of  instituting  proceedings  in 
bankruptcy,  the  United  States  courts  will  not  interfere  with 
the  jurisdiction  already  acquired  by  the  state  courts,  but 
will  respect  the  title  of  their  receivers  and  their  right  to 
manage  and  control  the  property,  at  least  until  it  is  im- 
peached for  some  cause  for  which  it  is  impeachable  under 
the  bankrupt  act.  The  jurisdiction  of  the  state  court  hav- 
ing properly  attached,  and  its  right  to  appoint  receivers 
not  being  questioned,  the  property  of  defendants  is  re- 
garded as  being  lawfully  in  possession  of  that  court  by  its 

termined,   the  court  of    chancery  what  is  required  of  him,  and  make 

will  go  on  with  this  proceeding,  hut  a  transfer  of  such  property  as  he 

without  prejudice  to  the  rights  of  has  and  as  the  master  may  direct, 

the  assignee  in  bankruptcy  to  be  otherwise    the    attachment    must 

hereafter  appointed.     Whether  the  issue."    It  was  held,  however,  that 

creditor  can  maintain  his  right  to  if  the  debtor  had  been  declared  a 

what  may  pass  to  the  receiver  in  bankrupt,   and  had  delivered   his 

this  cause  must  be  a  subject  for  property  to  his  assignee,  this  would 

future  consideration ;  but  as  a  mat-  excuse  liim  from  making  an  assign- 

ter  of  practice  here,  we  must  go  on  ment  to    the   receiver,   since    the 

without  reference  to  the  defend-  bankrupt    court    would,    in    this 

ant's    proceeding    in   the    district  event,  have  put  it  out  of  liis  power 

court  of  the  United  States.    I  must,  to  make  such  assignment. 

therefore,  order  that  the  defendant  l  Spinning  v.  Ohio  Life  Insurance 

appear  before  the  master  and  do  &  Trust  Co.,  2  Disney,  336. 


CHAP.  II. J  COURTS. 


53 


receivers,  and  the  federal  court  has  no  such  superior  juris- 
diction or  supervisory  power  over  the  state  tribunal  as  will 
warrant  it  in  taking  the  property  out  of  the  receivers'  pos- 
session, or  enjoining  them  from  its  management.1  The 
bankrupt  court  will  not,  therefore,  upon  the  petition  of  the 
assignee  in  bankruptcy,  direct  its  marshal  to  take  the  assets 
out  of  the  hands  of  the  receivers,  and  it  may  enjoin  the 
bankrupts  from  interfering  with  the  property  in  the  posses- 
sion of  the  receivers.2  So  when  a  receiver  is  appointed  by 
the  state  court  over  mortgaged  premises,  in  an  action  for 
the  foreclosure  of  a  mortgage,  he  can  not  be  dispossessed  by 
an  assignee  in  bankruptcy  subsequently  appointed  over  the 
mortgagor's  estate  in  the  federal  court.3  And  when  a  state 
'  court,  through  its  receiver,  is  in  possession  of  the  property 
of  a  judgment  debtor,  who  is  afterward  adjudged  a  bank- 
rupt by  the  federal  court/the  latter  court  will  not  sanction 
the  forcible  seizure  of  the  property  in  the  receiver's  posses- 
sion and  its  delivery  to  the  assignee,  but  will  leave  the 
assignee  to  assert  his  title  by  proceedings  in  accordance  with 
the  bankrupt  act.4  So  it  is  held  that  the  assignee  in  bank- 
ruptcy is  not  entitled  to  a  receiver  in  the  first  instance,  upon 
a  bill  filed  by  him,  to  take  possession  of  the  bankrupt's 
property  held  by  receivers  appointed  in  the  state  court 
previous  to  the  proceedings  in  bankruptcy.  And  the  fact 
that  defendants  in  such  suit,  as  receivers  of  the  state  court, 
assert  a  prior  jurisdiction  acquired  by  that  tribunal,  and 

i  Sedgwick  v.  Menck,  6  Blatchf.,  s  Davis  v.  The  Railroad  Com- 
156;  S.  C,  1  Bank.  Reg.,  Second  pany,  1  Woods,  GG1. 
Edition,  675;  Beecher  v.  Bininger,  4  In  re  Hulst,  7  Benedict,  17.  But 
7  Blatchf.,  170;  Alden  v.  Boston,  in  such  case,  in  an  examination  be- 
Hartford  &  Erie  R.  Co.,  5  Bank,  fore  the  register  in  bankruptcy, 
Reg.,  230;  In  re  Clark  &  Bin-  concerning  the  affairs  of  the  bank- 
inger,  4  Benedict,  88;  Davis  v.  rupt,  the  receiver  may  be  examined 
The  Railroad  Company,  1  "Woods,  as  a  witness,  and  maybe  compelled 
661.  But  see,  contra,  In  re  Mer-  to  produce  the  books  of  the  bank- 
chants'  Insurance  Co.,  3  Biss.,  162;  rupt  for  examination.  In  re  Hulst, 
Piatt  v.  Archer,  9  Blatchf.,  559.  7  Benedict,  40. 

2  In  re  Clark  &  Bininger,  4  Bene- 
dict, 88. 


54  RECEIVERS.  [CHAP.  II. 

claim  thereupon  the  power  of  the  state  court  to  administer 
it,  constitutes  no  ground  for  the  interference  of  the  United 
States  court  by  appointing  a  receiver  in  limine,  especially 
when  it  is  not  shown  that  the  property  is  in  peril  of  waste 
or  loss  in  custody  of  the  state  court,  or  that  the  receivers 
are  violating  their  duty,  or  that  they  are  irresponsible  or 
threaten  the  removal  of  the  property.1  And  an  action  can 
not  be  maintained  in  the  United  States  courts  in  behalf  of 
an  assignee  in  bankruptcy,  to  compel  a  receiver  appointed 
by  a  state  court  in  a  creditor's  suit,  before  the  proceedings 
in  bankruptcy,  to  deliver  up  the  property  of  the  debtor  to 
the  assignee.2  It  would  seem,  however,  to  be  otherwise 
when  the  proceedings  in  the  state  court  are  entirely  unau- 
thorized and  void,  and  in  such  case  the  decree  of  the  state 
court  appointing  a  receiver  is  held  to  constitute  no  defense 
to  an  action  by  the  assignee  against  the  receiver  concerning 
the  property.3 

§  53.  While,  as  is  thus  shown,  the  federal  courts  sitting 
in  bankruptcy  have  generally  recognized  the  jurisdiction  of 
the  state  tribunals,  and  the  possession  of  then-  receivers, 
when  acquired  previous  to  the  bankruptcy  proceedings,  there 
have  been  cases  holding  a  contrary  doctrine,  and  insisting 
upon  the  exclusive  control  of  the  federal  court,  even  though 
the  state  court  had  first  acquired  jurisdiction,  and  though 
its  receiver  was  first  in  possession.  Thus,  it  has  been  held 
that  the  appointing  of  a  receiver  over  an  insolvent  corpora- 
tion by  a  state  court,  under  proceedings  instituted  by  the 
attorney-general  of  the  state  for  the  dissolution  of  the  cor- 
porate body,  in  conformity  with  the  laws  of  the  state,  was  a 
"  taking  on  legal  process,"  within  the  meaning  of  the  thirty- 
ninth  section  of  the  national  bankrupt  act  of  1867 ;  and  that 
such  a  case  did  not  present  a  question  of  concurrent  jurisdic- 

1  Beecher  v.  Bininger,  7  Blatchf.,  2  Sedgwick  v.  Menck,  6  BlatcM., 

170.     See,  contra,  Piatt  v.  Archer,  156;  S.  C,   1  Bank.   Reg.,  Second 

9  BlatcM.,  559,  where  the  assignee  Edition,  675. 

was  himself  appointed  receiver  in  s  Buchanan  v.  Smith,    16  Wal, 

Buch  a  case.  309;  S.  C,  7  Bank.  Reg.,  513. 


CHAP.  II.]  COURTS.  55 

tion  between  the  state  and  federal  tribunals,  since  the  ex- 
clusive jurisdiction  of  the  United  States  court  attaches 
whenever  insolvency  intervenes,  so  as  to  render  the  debtor 
a  proper  subject  for  the  operation  of  the  bankrupt  act.  And 
while,  in  such  case,  the  federal  court  may  recognize  the  pro- 
ceedings in  the  state  court,  so  far  as  the  jurisdiction  there  is 
attempted  to  be  exercised  for  the  dissolution  of  the  corpora- 
tion, it  is  held  that  it  can  not  allow  the  receiver  of  the  state 
court  to  retain  control  of  the  assets  of  the  corporation,  since 
the  federal  tribunal  exercises  exclusive  jurisdiction  in  cases 
of  bankruptcy.1  So  where  a  creditor  of  an  insolvent  insur- 
ance company  had  instituted  proceedings  to  obtain  a  receiver 
in  a  state  court,  and  to  set  aside  an  assignment  by  the  com- 
pany of  all  its  property  to  a  trustee,  and  before  the  state 
court  had  taken  any  action  in  the  matter  a  bill  was  filed  in 
the  federal  court  by  non-resident  creditors  for  the  same  re- 
lief, that  court  took  jurisdiction  and  appointed  a  receiver, 
notwithstanding  the  pendency  of  the  action  in  the  state 
court.2  The  doctrine  of  the  cases  here  cited,  however,  is 
plainly  repugnant  to  the  weight  of  authority,  as  shown  in 
the  preceding  section. 

§  54.  As  illustrating  the  general  doctrine  under  discus- 
sion, when  a  trustee  in  a  deed  of  trust  securing  the  bond- 
holders of  a  railway  company  files  his  bill  for  a  foreclosure 
in  the  federal  court,  and  pending  this  proceeding,  and  with- 
out leave  of  this  court,  he  brings  an  action  to  foreclose  the 
same  trust  deed  in  a  state  court,  where  he  obtains  a  receiver 
and  a  decree  of  foreclosure,  and  sells  the  property,  the 
United  States  court  nevertheless  retains  its  jurisdiction.  It 
may,  therefore,  upon  a  proper  showing  of  the  necessity  for 
a  receiver,  appoint  one  on  the  application  of  a  bondholder, 
the  interference  of  the  state  court  being  regarded  as  unau- 
thorized, and  as  not  affecting  the  previously  acquired  juris- 


i  In  re  Merchants'  Insurance  Co.,  2  Buck  v.  Piedmont  &  Arlington 
3  Biss.,  162.  And  see  Piatt  v.  Ar-  Life  Ins.  Co.,  4  Fed.  Rep.,  849;  S. 
cher,  9  Blatchf.,  559.  C,  4  Hughes,  415. 


5G  RECEIYEKS.  [CHAP.  II. 

diction  of  the  federal  court.1  Xor  will  the  state  courts 
entertain  an  action  for  the  foreclosure  of  a  mortgage,  or  to 
avoid  and  set  aside  a  previous  foreclosure  by'the  mortgagee, 
when  the  mortgaged  premises  are  in  the  possession  of  a  re- 
ceiver duly  appointed  by  a  United  States  court  having  juris- 
diction for  that  purpose,  since  this  would  necessarily  disturb 
the  possession  of  the  receiver,  which  is  the  possession  of  the 
court  appointing  him.  In  such  a  case  relief  should  be 
sought  in  the  federal  court,  which  is  the  more  appropriate 
forum  for  determining  the  rights  of  the  parties,  it  having 
already  taken  possession  of  the  property  by  its  receiver,  and 
being  empowered  to  protect  the  interests  of  all  parties  in 
the  distribution  of  the  mortgage  fund.2 

§  55.  When  a  state  court  has  acquired  jurisdiction  of  an 
action  against  a  railway  company  for  the  forfeiture  of  its 
franchise  and  for  a  receiver,  and  has  appointed  a  receiver 
and  declared  the  franchise  forfeited  and  the  corporation 
dissolved,  a  federal  court  will  not  entertain  a  bill  against 
the  receiver  and  the  railway  company  for  an  accounting, 
but  will  leave  the  person  aggrieved  to  pursue  his  remedy  by 
applying  to  the  state  court,  which  alone  has  control  over  the 
receiver.3 

§  56.  Where  a  business  firm  is  in  a  condition  of  actual 
insolvency,  and  one  partner  files  a  bill  in  a  state  court  for  a 
dissolution  of  the  firm,  and  for  an  accounting  and  a  receiver, 
his  proceeding  is  regarded  as  an  act  of  bankruptcy  within 
the  meaning  of  the  bankrupt  law,  the  appointment  of  the 

1  Bill  v.  New  Albany,  etc. ,  R.  Co. ,  possession  of  a  railway  by  a  receiver 
2Biss.,390.  See,  also,  Union  Trust  appointed  in  a  state  court  would 
Co.  v.  The  Rockford,  Rock  Island    not  bar  proceedings  for  the  fore- 

6  St.  Louis  R.  Co.,  U.  S.  Circuit  closure  of  a  mortgage  upon  the 
Court,  Northern  District  of  Illinois,     property  of  the  railway  in  a  fed- 

7  Chicago  Legal  News,  33.  eral  court,  and  that  the  latter  court 

2  Milwaukee  &  St.  Paul  R.  Co.  v.  might  proceed  with  the  foreclosure, 
Milwaukee  &  Minnesota  R.  Co.,  20  but  without  interfering  with  the 
Wis.,  165.  But,  in  Mercantile  Trust  receiver,  or  with  his  possession  of 
Co.  v.  Lamoille  Valley  R.  Co.,   16  the  property. 

Blatchf.,  324,  it  was  held  that  the        aconkling  v.  Butler,  4  Biss.,  22. 


CHAP.  II.]  COURTS. 


57 


receiver  being  a  taking  of  the  debtor's  property  on  legal 
process,  and  its  effect  being  to  delay  and  defeat  the  opera- 
tion of  the  bankrupt  act.1 

§  57.  Upon  a  bill  by  the  assignee  in  bankruptcy  of  a  co- 
partnership to  set  aside  an  assignment  for  the  benefit  of 
creditors,  made  by  the  firm  when  in  a  coudition  of  in- 
solvency, and  to  restrain  the  assignees  from  doing  anything 
under  such  assignment,  it  is  proper  that  a  receiver  be  ap- 
pointed by  the  bankrupt  court  to  take  charge  of  the  prop- 
erty, and  hold  it  for  the  benefit  of  all  creditors  who  may 
have  an  interest  therein.2 

§  58.  A  conflict  of  jurisdiction  between  a  state  and  fed- 
eral court  concerning  property  in  controversy,  there  being 
actions  pending  in  each  tribunal  by  conflicting  claimants  to 
the  property,  and  there  being  imminent  danger  of  collision 
between  the  executive  officers  of  the  different  courts  in  the 
enforcement  of  the  process  of  their  courts,  has  been  held 
sufficient  ground  to  warrant  the  federal  court  in  granting 
an  injunction  and  appointing  a  receiver  over  the  property, 
when  there  was  a  probability  of  a  bitter  and  long  continued 
litigation  at  law,  and  the  property  was  of  a  perishable 
nature  and  liable  to  be  rendered  entirely  valueless,  unless 
taken  possession  of  by  a  receiver  and  sold.3 

§  59.  When  a  receiver  of  a  railway  company  is  appointed 
by  a  United  States  court,  and  he  is  charged  with  the  duty  of 
operating  the  road,  and  is  accountable  to  the  court  for  the 
proceeds,  such  proceeds  are  beyond  control  of  the  state 
courts,  the  receiver's  possession  being  the  possession  of  the 
court  appointing  him.  The  state  courts,  therefore,  have  no 
authority  to  enforce  as  against  such  receiver  the  payment 
of  a  judgment  recovered  against  the  railway  for  damages 
resulting  from  the  killing  of  cattle,  even  under  a  statute  of 
the  state  providing  a  process  for  the  enforcement  of  judg- 
ments against  railways  out  of  funds  in  the  hands  of  their 

»  In  re  Bininger,  7  Blatchf.,  2G2.        3  Crane  v.  McCoy,  1  Bond,  422. 
2  Sedgwick  v.  Place,  3  Benedict, 
360. 


58  RECEIVERS.  [CHAP.  II 

receivers  or  agents.  The  judgment  creditor,  in  such  case, 
should  apply  to  the  federal  court,  either  for  leave  to  sue  the 
receiver,  or  for  an  order  on  him  to  pay  the  judgment.1 

§  60.  It  has  been  held  in  Wisconsin,  that  a  state  court 
might  entertain  an  action  against  a  receiver  of  a  railway 
appointed  by  a  federal  court,  and  might  proceed  to  judg- 
ment therein,  without  leave  of  the  latter  court  to  bring 
such  action,  provided  there  was  no  actual  interference  with 
the  receiver's  possession.2  This  doctrine  is,  however,  plainly 
repugnant  to  the  well-established  principle,  hereafter  dis- 
cussed, that  no  action  can  be  maintained  against  a  receiver 
without  leave  of  the  court  from  which  he  derives  his  ap- 
pointment.3 And  it  is  not  perceived  that  the  rule  requiring 
such  permission  as  a  condition  precedent  to  bringing  an 
action  against  a  receiver  is  in  any  manner  affected  by  the 
fact  that  he  may  have  been  appointed  by  a  federal  court  and 
the  action  be  brought  against  him  in  a  state  court,  or  vice  versa. 

§  61.  When  a  receiver,  acting  under  appointment  from 
a  United  States  court,  is  in  actual  possession  of  property,  a 
state  court  will  not  grant  a  writ  of  assistance  to  a  subse- 
quently appointed  receiver  in  the  state  tribunal,  to  enable 
Mm  to  get  possession  of  the  property.  The  right  to  posses- 
sion, under  such  circumstances,  will  not  be  determined  upon 
a  mere  motion,  since  the  possession  of  the  receiver  of  the 
federal  court  is  regarded  as  that  of  a  stranger,  and  to  be 
determined  only  by  an  action  and  not  upon  motion.4 

§  62.  The  fact  that  a  receiver  derives  his  appointment 
from  a  United  States  court  does  not  confer  upon  him  any 
greater  power  or  privileges  in  respect  to  bringing  actions  in 
the  state  courts  than  if  he  were  appointed  by  those  courts, 
and  the  question  of  comity  between  the  two  tribunals  will 
not  be  considered  in  such  case.5 

i  Ohio    &   Mississippi   R.    Co.  v.  4  Gelpeke  v.  Milwaukee  &  Hori- 

Fitch,  20  Ind.,  498.  con  R.  Co.,  11  Wis.,  454,  opinion  of 

2  Kinney  v.  Crocker,  18  Wis.,  74.  Dixon,  C.  J.,  and  Paine,  J. 

3  See  §  254,  infra,  and  authori-  5  Battle  v.  Davis,  66  N.  C,  252. 
ties  there  cited. 


CHAPTER  III. 

OF  THE  SELECTION  AND  ELIGIBILITY  OF  THE  RECEIVER. 

§  63.  Reference  to  master  in  chancery  to  select ;  English  and  New  York 
practice. 

64.  Interference  with  master's  selection. 

65.  Discretion  of  court  in  selection  of  receiver  rarely  interfered  with. 

66.  When  appellate  court  may  interfere. 

67.  Relationship  to  the  parties  as  affecting  eligibility. 

68.  Person  in  defendant's  interest ;  solicitor  eligible ;  familiarity  with 

the  property. 

69.  Eligibility  as  affected  by  distant  residence ;  residence  in  state  un- 

necessary. 

70.  Person  not  eligible  whose,  duty  it  is  to  watch  receiver ;  solicitor ; 

master  in  chancery ;  barrister ;  peer ;  party  to  the  cause. 

71.  Clerk  of  court  not  a  receiver  ex  officio;  clerk  and  master. 

72.  Officer  of  corporation  usually  ineligible  as  its  receiver;  when 

eligible. 

73.  One  corporation  may  be  receiver  of  another. 

74.  Trustee  not  usually  eligible ;  when  eligible. 

75.  Next  friend  of  infants  ineligible. 

76.  Mortgagee  eligible  as  receiver  of  mortgaged  premises. 

77.  Receiver  of  debtor  ineligible  as  his  assignee  in  bankruptcy. 

78.  Administrator  of  deceased  partner  eligible  as  receiver  of  firm 

assets. 

79.  Particular  person  nominated  in  bill ;  consent  of  parties. 

80.  Effect  of  interest  as  stockholder  and  director  of  a  plaintiff  corpo- 

ration. 

81.  Mortgagee  of  foreign  estates  eligible. 

§  63.  A  receiver  being  an  impartial  person  as  between 
the  parties,  and  being  the  officer  and  representative  of  the 
court  in  the  management  and  control  of  the  property  or 
fund  in  controversy,  considerable  importance  attaches  to 
the  question  of  his  selection  as  well  as  to  his  qualifications 
and  competency  for  the  management  of  the  trust  committed 
to  his  charge.  The  usual  course  of  practice  in  the  English 
Court  of  Chancery,  with  reference  to  the  selection  of  a 


GO 


RECEIVERS. 


[CHAP.  III. 


receiver,  was  to  refer*  the  matter  to  a  master  in  chancery  to 
make  the  selection.  The  parties  in  interest  in  the  cause 
were  then  at  liberty  to  appear  before  the  master  and  to 
nominate  suitable  persons  for  the  office,  whose  qualifications 
and  competency  were  passed  upon  by  the  master,  who  made 
the  appointment  and  reported  his  selection  to  the  court.1 
A  similar  practice  also  prevailed  under  the  New  York  chan- 
cery system  prior  to  the  adoption  of  the  code  of  procedure 
in  that  state.2 

§  64.  "When  the  case  has  been  referred  to  a  master  in 
chancery  to  make  the  appointment,  and  he  has  made  his  re- 
port approving  and  recommending  the  appointment  of  a 
particular  person,  his  report  and  approval  should  stand  until 
the  person  so  recommended  is  impeached  as  an  improper 
person.3  And  the  courts  are  exceedingly  averse  to  interfer- 
ing with  the  discretion  exercised  by  the  master  in  making 
his  selection;  and  when,  after  due  investigation,  he  has 
made  the  appointment  and  reported  to  the  court,  it  will  not 
interfere  with  the  selection,  or  entertain  exceptions  to  the 
appointment,  unless  some  good  and  substantial  objection  can 
be  shown.4     The  reason  for  the  reluctance  thus  manifested 


1  For  illustrations  of  this  practice 
in  the  English  chancery,  see  Thomas 
v.  Dawkin,  1  Ves.  Jun.,  452 ;  S.  C,  3 
Bro.  C.  C,  508;  Garland  v.  Garland, 

2  Ves.  Jun.,  137;  Anonymous,  3 
Ves.,  515;  Wilkinsv.  Williams,  id., 
588 ;  Tharpe  v.  Tharpe,  12  Ves.,  317 ; 
Wynne  v.  Lord  Newborough,  15 
Ves.,  283;  Creuze  v.  Bishop  of  Lon- 
don, 2  Bro.  C.  0.,  253. 

2  See  In  re  Eagle  Iron  Works,  8 
Paige,  385. 

3  Creuze  v.  Bishop  of  London,  2 
Bro.  C.  C.,  253;  Thomas  v.  Dawkin, 

3  Bro.  C.  C,  508. 

*  Tharpe  v.  Tharpe,  12  Ves.,  317; 
In  re  Eagle  Iron  Works,  8  Paige, 
385 ;  Thomas  v.  Dawkin,  1  Ves.  Jun., 
452.     And  see  Garland  v.  Garland, 


2  Ves.  Jun.,  137;  Anonymous,  3 
Ves.,  515;  Wilkins  v.  Williams,  id., 
588.  In  Tharpe  v.  Tharpe,  12  Ves., 
317,  the  master  had  appointed  a  re- 
ceiver of  the  estate  of  an  infant, 
upon  the  recommendation  of  the 
only  trustee  named  in  the  testator's 
will,  who  had  acted  in  the  manage- 
ment of  the  estate.  Upon  excep- 
tions to  the  master's  report  as  to 
the  appointment,  Lord  Erskine  ob- 
served, p.  319,  as  follows:  "The 
cases  cited  are  built  upon  principles 
that  are  not  peculiar  to  this  court. 
All  courts  place  a  degree  of  discre- 
tion in  officers  appointed  for  the 
management  of  concerns  full  of  <1<  - 
tail  and  complicated  circumstances ; 
and  those  who  impeach  the  judg- 


CHAP.  III.]  SELECTION    AND    ELIGIBILITY.  01 

in  interfering  with  the  appointment  of  the  master  is  found 
in  the  necessity  which  exists  on  the  part  of  the  courts  of 
reposing  a  considerable  degree  of  discretion  in  the  judgment 
of  officers,  such  as  masters  in  chancery,  whom  they  have 
appointed  for  the  examination  of  complicated  matters  of 
detail.1  The  court  will  not,  therefore,  disturb  the  appoint- 
ment made  by  the  master  merely  because  it  may  be  of  opin- 
ion that  a  better  selection  could  have  been  made.  And  to 
induce  the  court  to  interfere  it  must  either  be  shown  that 
the  person  appointed  by  the  master  is  legally  disqualified, 
or  that  his  situation  is  such  as  to  render  it  probable  that  the 
interests  of  the  parties  to  the  litigation  will  not  be  properly 
managed  if  entrusted  to  his  hands.2  If,  therefore,  both  of 
the  persons  proposed  to  the  master  for  the  receivership  are, 
as  to  character  and  qualifications,  of  equal  standing,  the 
court  will  not  interfere  wit&  the  appointment.3  And  while 
the  party  complaining  of  the  master's  selection  will  not  be 
precluded  from  making  a  special  case  to  be  presented  im- 
peaching the  master's  judgment,  yet  upon  the  naked  allega- 
tion that  the  person  rejected  by  the  master  was  more 
competent  than  another,  the  court  will  not  investigate  the 
particular  reason  why  he  preferred  the  one  to  the  other.4 
If,  however,  the  court  is  of  opinion  that  the  master  has  not 

ment  of  those  officers  upon  such  ter  by  the  trustee,  in  whom  the 
points  must  show  a  reason  for  the  testator  reposed  this  peculiar  trust ; 
exception.  Lord  Anvanley,  there-  not  selected  by  the  master  at  his 
fore,  in  Bowersbank  v.  Colasseau,  own  discretion  or  pointed  out  to 
3  Ves.,  164,  states  truly  that  the  him  by  accident.  His  residence  at 
judgment  of  the  master  is  to  be  the  distance  of  fourteen  miles  only 
disturbed  only  upon  special  is  no  objection.  The  person  pro- 
grounds,  a  strong  case  to  show  that  posed  is,  therefore,  altogether  unex- 
the  person  appointed  ought  not  to  ceptionable."  And  the  exceptions 
be  receiver,  and  the  court  will  not  were  overruled. 
enter  comparisons.  No  objection  l  Tharpe  v.  Tharpe,  12  Ves.,  317. 
appears  to  the  person  appointed  in  -  In  re  Eagle  Iron  Works,  8  Paige, 
this  instance.     He  is  a  land  survey-  385. 

or,  acquainted  with  business  likely  3  Thomas  v.  Dawkin,  1  Ves.  Jun., 

to  qualify  him  for  such  an  office ;  a  452 ;  S.  C,  3  Bro.  C.  C,  508. 

fit  person,  therefore,  in  that  respect.  4  Anonymous,  3  Ves.,  515. 
He  was  recommended  to  the  mas- 


62  RECEIVERS.  [CHAP.  III. 

given  proper  attention  to  the  circumstances  of  the  case  in 
making  the  appointment,  it  is  proper  to  require  him  to 
revise  his  report.1 

§  65.  The  considerations  stated  in  the  previous  section  as 
applicable  to  the  appointment  when  made  by  a  master  in 
chancery  upon  a  reference,  are,  of  course,  equally  applicable 
to  the  appointment  when  made  by  the  court  itself  without 
a  reference.  And  in  all  such  cases  the  selection  and  appoint- 
ment of  a  particular  person  for  the  receivership,  out  of 
several  candidates  proposed,  is  regarded  as  a  matter  of  judi- 
cial discretion,  to  be  determined  by  the  court  according  to 
the  circumstances  of  the  case.2  The  exercise  of  this,  like 
all  other  matters  of  judicial  discretion,  will  rarely  be  inter- 
fered with  by  an  appellate  tribunal.3  And  it  may  be  as- 
serted as  a  general  rule,  that,  to  induce  an  appellate  court 
to  interfere  with  the  decision  of  an  inferior  tribunal  in  the 
selection  of  a  receiver,  it  is  necessary  to  show  some  "  over- 
whelming objection "  in  point  of  propriety,  or  some  fatal 
objection  upon  principle,  to  the  person  named.4  And  the 
fact  that  there  are  great  disputes  and  differences  between  the 

i  Wynne  v.  Lord  Newborough,  15  ceiver  of  the  rents  of  the  real  estate 

Ves.,  283.  in    controversy,    without    salary. 

2 Perry  v.  Oriental  Hotels  Co.,  L.  Lord  Justice  Knight  Bruce  ob- 
it., 5  Ch.  App.,  420;  Cookes  v.  serves,  p.  528 :"  Upon  a  mere  ques- 
Cookes,  2  DeG.,  J.  &  S.,  526;  Will-  tion  of  the  exercise  of  discretion 
iamson  v.  Wilson,  1  Bland,  418.  in  the  choice  of  one  out  of  several 
See  as  to  personal  considerations  candidates,  if  I  may  use  the  ex- 
governing  the  court  in  the  choice  pression,  proposed  before  the  Vice- 
of  a  receiver,  Smith  v.  New  York  Chancellor  for  the  office  of  receiver, 
Consolidated  Stage  Co.,  28  How.  the  court  will  find,  according  to  its 
Pr.,  208.  old  practice  and  habits,  the  greatest 

3  Cookes  v.  Cookes,  2  De  G.,  J.  &  difficulty  in  acting  against  the  ex- 
S.,  526;  Perry  v.  Oriental  Hotels  ercise  of  that  discretion.  To  induce 
Co.,  L.  R.,  5  Ch.  App.,  420.  the  court  to  act  in  such  a  case, 

4  Cookes  v.  Cookes,  2  De  G.,  J.  &  against  the  decision  of  the  lower 
S.,  526.  This  was  a  motion  before  judge  by  whom  the  selection  has 
the  Court  of  Appeal  in  Chancery,  to  been  made,  it  would  be  necessary 
discharge  an  order  of  the  Vice-Chan-  to  find  some,  if  I  may  use  the  ex- 
cellor,  appointing  one  of  the  de-  pression,  overwhelming  objection 
fendants  in  an  action  to  carry  into  in  point  of  propriety  of  choice,  or 
execution  the  trusts  of  a  will,  re-  some  objection  fatal  in  principle." 


CHAP.  III.]  SELECTION    AND    ELIGIBILITY.  03 

parties  in  interest,  one  of  whom  has  been  appointed  receiver, 
does  not  of  itself  constitute  sufficient  ground  for  reversing 
the  appointment  made  by  the  court  below.1 

§  66.  "When,  however,  the  objection  urged  to  the  fitness 
or  competency  of  the  person  selected  by  the  inferior  court 
is  presented  as  a  question  of  principle,  and  not  one  of  mere 
expediency,  an  appellate  tribunal  will  sometimes  interfere 
with  the  appointment  of  the  inferior  court.  Thus,  when  it 
is  obvious  that  the  person  proposed  by  defendants  for  the 
receivership,  and  rejected,  was  a  proper  and  unobjection- 
able person  for  the  management  of  the  estate,  and  that  the 
appointment  of  another  person  would  result  in  injury  to  the 
estate  by  causing  very  great  additional  expense,  the  appoint- 
ment of  such  other  person  may  be  revoked,  and  the  person 
proposed  by  defendants  may  be  appointed.2 

§  67.  As  regards  the  question  of  relationship  of  the  per- 
son appointed,  to  either  of  the  parties  in  interest  in  the  liti- 
gation, while  the  fact  of  such  relationship  is  not,  per  se,  an 
absolute  disqualification  for  the  receivership,  yet  it  must  be 
allowed  to  have  its  proper  weight  in  connection  with  other 
circumstances.  And  in  a  case  where  the  person  appointed  was 
the  brother  of  one  of  the  parties  to  the  action  and  the  son  of 
one  claiming  to  be  a  large  creditor,  and  was  admitted  by  the 
plaintiff  to  have  taken  an  active  part  in  the  controversy  as 

^ookes  v.  Cookes,  2  De  G.,  J.  &  vious  that  there  could  hardly  be 
S.,  526.  Upon  this  point,  Lord  any  case  in  which  it  would  not  be 
Justice  Turner  observes  as  follows,  competent  to  the  parties  to  come 
p.  531:  "Two  points  have  been  here,  by  way  of  appeal  from  the 
urged  in  support  of  this  appeal  as  appointment  of  a  receiver ;  for  in 
questions  of  principle.  Fust,  it  is  cases  where  receivers  are  appointed 
said  that  there  are  great  disputes  it  is  almost  always  in  consequence 
and  differences  in  this  family,  and  of  the  differences  and  disputes  be- 
that  it  is  not  for  the  interest  of  the  tween  the  parties.  I  think,  there- 
estate  that  this  gentleman  should  fore,  that  the  differences  between 
be  appointed  receiver.  But  if  the  these  parties,  unfortunate  as  they 
existence  of  differences  and  dis-  are,  furnish  no  ground  whatever 
putes  is  to  be  considered  as  a  ques-  for  this  application." 
tion  of  principle  affecting  the  2  Perry  v.  Oriental  Hotels  Co.,  L. 
appointment  of  a  receiver,  it  is  ob-  R.,  5  Ch.  App.,  420. 


64  RECEIVERS.  [CHAP.  III. 

his  friend  and  agent,  he  was  regarded  as  too  much  enlisted 
in  the  cause  to  permit  him  to  be  as  unbiased  and  impartial 
as  a  receiver  should  be,  and  was  therefore  removed.1 

§  68.  It  is  regarded  as  exceedingly  objectionable  to  ap- 
point as  receiver  a  person  who  is  in  the  interest  of  the  de- 
fendant, against  whom  the  appointment  is  made.2  But  a 
solicitor  not  concerned  in  the  litigation  is  eligible  to  a  re- 
ceivership, although  if  appointed  he  can  not  act  as  solicitor 
in  any  proceedings  which  it  may  be  necessary  for  him  to 
take  as  receiver.3  But  it  is  improper  to  appoint  as  receiver 
over  a  particular  kind  of  property  a  person  who  is  entirely 
unfamiliar  therewith,  even  though  he  gives  an  undertaking  to 
attend  to  the  directions  of  another  person  familiar  with  the 
management  of  the  property,  since  it  is  always  preferable 
that  the  receiver  appointed  should  act  upon  his  own  respon- 
sibility.4 

§  69.  The  fact  of  the  receiver  chosen  residing  at  a  great 
distance  from  the  estate  or  property  which  is  to  be  sub- 
jected to  his  management  and  control,  while  not  regarded 
as  an  absolute  disqualification  for  the  office,  is  a  circumstance 
which  should  be  taken  into  consideration  in  making  the  ap- 
pointment.5 But  where  the  person  appointed  receiver  of 
an  estate  was  a  land  surveyor,  and  well  qualified  for  the 
management  of  the  property,  the  fact  of  his  residence  at 
a  distance  of  fourteen  miles  from  the  estate  over  which  he 
was  appointed  was  regarded  as  no  valid  objection.6  And  it 
is  not  necessary  that  the  person  selected  should  be  a  resi- 
dent of  the  state  or  jurisdiction  in  which  the  suit  is  pend- 

1  Williamson  v.  Wilson,  1  Bland,  2Lupton    v.   Stephenson,    11   Ir. 

418.   As  to  the  circumstances  which  Eq.,  484. 

will  justify  the  appointment  of  one  3  Wilson  v.  Poe,  1  Hog.,  322. 

of  the  parties  to  a  business  transac-  4  Lupton    v.   Stephenson,    11  Ir. 

tion,  when  the  parties  themselves  Eq.,  484. 

had  agreed  that  such  person  should  5  W3rnne  v.  Lord  Newborough,  15 
manage  and  close  up  the  business  in  Ves.,  283.     See  2  Daniell's  Chan- 
question,  see  Hanover  Fire  Insur-  eery  Practice,  ch.  XXXPX,  §  IH. 
ance  Co.  v.  Germania  Fire  Insur-  6Tharpev.  Tharpe,  12  Ves.,  317. 
ance  Co.,  33  Hun,  539. 


CHAP.  III.]  SELECTION    AND    ELIGIBILITY.  C5 

ing.  Thus,  under  the  laws  of  Missouri,  a  public  officer  of 
the  state  being  charged  with  the  duty  of  instituting  pro- 
ceedings to  wind  up  insolvent  insurance  companies,  and 
being  appointed  in  that  state  receiver  of  the  company,  the 
same  person  was  appointed  receiver  by  the  federal  court  in 
Tennessee,  in  a  subsequent  suit  instituted  by  creditors  of 
the  company  to  reach  its  assets  in  the  latter  state.1 

§  70.  It  is  important  to  observe  that  courts  of  equity 
are  exceedingly  jealous  of  appointing  any  person  to  a  re- 
ceivership whose  duty  it  would  otherwise  be  to  watch  the 
proceedings  of  the  receiver,  or  to  call  him  to  an  account  for 
his  management  of  the  trust.2  Upon  this  ground  a  solicitor 
under  a  commission  of  lunacy,  under  the  English  practice, 
should  not  be  appointed  receiver  of  the  estate  of  the  luna- 
tic.3 And  upon  similar  ground,  a  solicitor  in  the  cause  is 
not  a  proper  person  for  tlxjs  receivership,  since  no  person 
ought  to  be  allowed  to  control  his  own  accounts  in  that 
capacity.4  So  it  is  improper  to  appoint  as  receiver  the 
law  partner  of  the  solicitor  for  complainant  in  the  cause, 
since  such  partner  is  presumptively  as  much  interested  in 
the  proceedings  as  complainant's  solicitor  himself.5  So  it 
has  been  held  that  a  master  in  chancery  is  not  a  proper 
person  to  be  appointed,  since  he  is  an  officer  of  the  court, 
whose  duty  it  is  to  examine  the  receiver's  accounts  and  to 
check  his  conduct ;  and  his  appointment  is  ground  for  re- 
versing the  decree.6  A  barrister,  however,  is  competent  to 
act  as  receiver,7  and  under  the  English  practice  barristers  are 

Baylor  v.    Life  Association  of  137;  In  re  Lloyd,  12  Ch.  D.,  447; 

America,  3  Fed.    Rep.,   465.     See  Watson  v.  Arundel,  Ir.  Rep.,  9  Eq., 

S.   C,  on   final  hearing,   13  Fed.  324. 

Hep.,  493.  5  Merchants'    &    Manufacturers' 

-Stone  v.  Wishart,  2  Madd.,  63,  National    Bank   v.    Kent,   Circuit 

1st  American  Edition,  374;  Sykes  Judge,  43  Mich.,  292. 

i\   Hastings,   11  Ves.,   363;  In  re  eBenneson  v.   BUI,   62  111.,  408; 

Lloyd,  12  Ch.  D.,  447.  Ealgore  v.  Hair,  19  S.  C,  486. 

:i  Ex  parte  Pincke,  2  Meriv.,  452.  "  Garland  v.  Garland,  2  Ves.  Jun., 

*  Garland  v.  Garland,  2  Ves.  Jun. ,  137. 
5 


QQ  RECEIVERS.  [CHAP.  III. 

very  frequently  appointed.1  It  has  been  held,  however,  that 
the  fact  of  the  barrister  selected  being  in  practice  in  London 
at  a  great  distance  from  the  estate,  coupled  with  the  fact  of 
his  being  a  member  of  parliament,  while  not  an  absolute 
disqualification,  should  have  been  considered  by  the  master 
in  making  the  appointment.2  And  in  England,  a  receiver 
will  not  be  appointed  who  is  not  subject  to  the  ordinary 
process  of  the  courts  by  commitment,  and  against  whom  the 
same  remedies  are  not  available  as  against  a  common  citizen. 
A  peer  of  the  realm  is,  therefore,  not  a  competent  person  to 
be  appointed.3  And,  unless  under  special  circumstances,  as 
in  partnership  cases  in  some  instances,  a  party  to  the  cause 
will  not  ordinarily  be  appointed,  without  the  consent  of  the 
other  party.4 

§  71.  While  there  are  some  reported  cases  in  which  the 
courts  have  appointed  their  own  clerks  as  receivers,  yet  a 
clerk  of  a  court  is  not  by  virtue  of  his  office  a  receiver  of 
the  court,  his  functions  being  entirely  distinct  from  those  of 
receiver.5  The  same  distinction  is  recognized  where  the 
offices  of  clerk  and  of  master  in  chancery  are  combined  in 
one  and  the  same  person.  In  such  case  the  court  can  no 
more  compel  him  to  take  upon  himself  the  office  of  receiver 
in  a  given  case,  than  it  can  compel  any  private  citizen  to 
assume  such  duties.  And  where  the  court  has  ordered  that 
the  receiver  in  a  cause  deliver  over  to  the  clerk  and  master 
the  funds  of  the  receivership,  and  that  the  clerk  and  master 
be  appointed  receiver,  such  order  will  not  have  the  effect  of 
making  him  the  receiver,  where  nothing  is  done  by  him  in 
that  capacity,  and  no  facts  appear  from  which  an  inference 
of  his  acceptance  can  be  drawn.6 


^Daniell's    Chancery   Practice,  4  In  re  Lloyd,  12  Ch.  D.,  447. 

ch.  XXXIX,  §  HE.  5  Hammer  v.  Kaufman,  39  HI.,  87 

2  Wynne  v.  Lord  Newborough,  15  Waters  v.    Carroll,  9   Yerg.,   102 
Ves.,  283.  Kerr  v.   Brandon,  84  N.   C,  128 

3  Attorney-General  v.  Gee,  2  Ves.  Rogers  v.  Odom,  86  N.  C,  432. 

&  Bea.,  208.  6  Waters  v.  Carroll,  9  Yerg.,  102 


CHAr.  III.]  SELECTION   AND    ELIGIBILITY.  G7 

§  72.  Ill  compulsory  proceedings  against  corporate  bodies 
for  the  appointment  of  receivers,  the  selection  of  a  proper 
person  for  the  receivership  is  a  question  of  much  delicacy 
and  grave  importance.  In  this  class  of  cases,  it  is  regarded 
as  manifestly  improper  to  appoint  an  officer  of  or  person  con- 
nected with  the  management  of  the  corporation  itself  to  the 
post  of  receiver.1  In  such  cases  the  courts  act  upon  the 
principle  that  if  the  officers  of  the  corporation  are  unfit 
persons  for  the  management  of  its  affairs  in  their  official 
capacity,  they  are  equally  unfit  to  be  entrusted  with  such 
management  in  the  capacity  of  receivers,  and  the  rule  of 
exclusion  may  be  regarded  as  based  upon  sound  principles 
of  public  policy.  Where,  therefore,  proceedings  are  insti- 
tuted in  equity  against  an  insolvent  banking  corporation, 
under  the  statutes  of  the  state  authorizing  the  appointment 
of  receivers  of  insolvent  corporations  for  the  winding  up  of 
their  affairs,  the  court  will  not  appoint  an  officer  of  the  bank 
the  receiver  in  the  cause.2  And  when,  in  proceedings  against 
a  corporation  for  the  appointment  of  a  receiver,  the  person 
selected  for  the  trust  was  the  secretary  and  treasurer  of  the 
company,  as  well  as  its  legal  adviser  and  counselor,  and  was 
also  the  largest  single  creditor  of  the  corporation,  and  was 
the  legal  adviser  of  the  complainant,  and  drew  the  bill  in 
the  cause,  he  was  held  to  be  totally  disqualified  for  the  posi- 
tion.3   So  the  vice-president  of  an  insolvent  life  insurance 

1  Attorney-General  v.  Bank  of  value,  In  re  Empire  City  Bank,  10 
Columbia,  1  Paige,  511 ;  Baker  v.  How.  Pr.,  498. 
Administrator  of  Backus,  32  HI.,  8 Baker  v.  Administrator  of 
79;  Freeholders  v.  State  Bank,  28  Backus,  32  El.,  79.  The  court  say, 
N.  J.  Eq.,  166;  McCullough  v.  Mer-  p.  112:  "It  seems  that  the  sec- 
chants'  Loan  &  Trust  Co.,  29  N.  J.  retary  and  treasurer  of  the  com- 
Eq.,  217.  But  see  In  re  Fifty-four  pany  was  A.  C.  Coventry,  a  lawyer 
First  Mortgage  Bonds,  15  S.  C,  304.  by  profession,  and  its  counselor  and 

2  Attorney-General  v.  Bank  of  adviser.  He  was,  too,  the  largest 
Columbia,  1  Paige,  511.  And  see  single  creditor  of  the  company, 
as  to  considerations  governing  the  having  claims  against  it  exceeding 
court  in  the  appointment  of  a  re-  $3,000.  He  was  the  adviser,  also, 
ceiver  of  a  large  banking  corpora-  of  the  complainant,  Baker,  whom 
tion,  whose  assets    are    of    great  the  defendant  in  error  represents, 


GS  RECEIVERS.  [CHAP.  III. 

company,  to  wnom  it  has  assigned  all  its  effects  in  trust  for 
the  benefit  of  its  creditors,  is  not  regarded  as  a  proper  per- 
son to  be  appointed  receiver  over  the  company  in  an  action 
to  set  aside  such  assignment.1  If,  however,  the  laws  of  the 
state  providing  for  the  voluntary  dissolution  of  insolvent 
corporations  authorize  the  appointment  of  any  of  the  officers 
or  stockholders  of  the  corporation  as  receivers,  it  is  proper 
to  appoint  the  president  and  book-keeper  of  the  corporation, 
when  not  otherwise  disqualified,  and  when  it  is  not  shown 
that  their  conduct  or  management  of  the  business  has  in 
any  manner  tended  to  produce  the  insolvency  of  the  com- 
pany.2 

§  73.  Upon  proceedings  in  equity  against  an  insolvent 
corporation  for  the  winding  up  of  its  affairs,  and  the  ap- 
pointment of  a  receiver,  the  person  selected  for  the  trust 
need  not  necessarily  be  an  individual  person,  and  a  corpo- 
rate body  may  itself  be  appointed  receiver  of  another 
corporation  upon  the  insolvency  of  the  latter.  And  this  is  per- 
missible, even  though  the  corporation  selected  for  the  office 
has  previously  recovered  a  judgment  in  its  capacity  of  re- 
ceiver of  a  former  insolvent  corporation,  against  the  defend- 
ant, so  that  it  is  to  this  extent  a  creditor  of  the  defendant ; 
there  beino-  no  unbending  rule  of  law  that  one  who  is  a 


and  drew  the  bill  in  the  cause.  He  impending  destruction.  And  there 
was,  without  having  disclosed  these  was  a  fatal  objection  to  the  person 
facts  to  the  court,  appointed  the  appointed  receiver.  He  was  not 
receiver  of  all  the  property  of  the  disinterested  ;  he  was  the  legal  ad- 
company,  and  without  trying  the  viser  of  the  complainant,  and 
market  with  it  by  an  offering  at  framed  the  bill;  he  was  the  legal 
public  sale,  he  privately  sold  it,  one  adviser  of  the  company ;  he  was 
day  after  he  was  appointed,  and  the  largest  single  creditor ;  all  these 
had  liis  claim  against  the  company  disqualified  him,  and  he  should  not 
fully  paid  out  of  the  proceeds."  have  been  appointed." 

.     .     "There  was  no  necessity  ^uck  v.   Piedmont    &  Arling- 

to  appoint  a  receiver,  because  no  ton  Life  Insurance  Co.,  4  Fed.  Rep., 

fraud  is  alleged  or  shown,  and  no  849. 

sufficient  proof  that  such  a  step  was  2  In  re  Eagle  Iron  Works,  8  Paige, 

necessary  to  save  the  property  from  385,  affirming  S.  C,  3  Edw.  Ch., 

material  injury,  or  rescue  it  from  385. 


CHAP.  III.] 


SELECTION    AND    ELIGIBILITY. 


09 


creditor  of  an  insolvent  institution  is  incompetent  to  act 
as  its  receiver.1 

§  74.  As  a  general  rule,  courts  of  equity  are  averse  to 
appointing  as  receivers  persons  who  occupy  relations  of 
trust  toward  the  property  or  estate  which  is  the  subject  of 
the  receivership.  And  a  trustee  or  executor,  appointed  by 
a  testator  for  the  management  of  his  estate,  is  usually  re- 
garded as  an  improper  person  to  be  appointed  receiver  of 
the  estate.2  And  this  is  true  regardless  of  whether  he  is  a 
sole  trustee,  or  whether  there  are  others  joined  with  him  as 
co-trustees  under  the  will  of  the  testator.3     The  reason  for 


1  In  re  Knickerbocker  Bank,  19 
Barb.,    602.       The    Knickerbocker 
Bank  being  insolvent,  the  United 
States    Trust    Company    was   ap- 
pointed  receiver.      This  company 
had  previously,  as  receiver  of  t#fe 
Knickerbocker  Savings  Institution, 
recovered  a  judgment  against  the 
Knickerbocker  Bank.      The  Trust 
Company,    being   the    receiver   of 
both  institutions,  and  thus  repre- 
senting both  debtor  and  creditor, 
applied  to  the  court  for  instructions 
as  to  the  course  it  should  pursue. 
The  court,  Mitchell,  J.,  say,  p.  603: 
"If  the  appointment  of    receiver 
was  only  for  the  purpose  of  suit  on 
behalf  of  the  Savings  Institution, 
there  would  be  a  manifest  impro- 
priety in  making  the  Trust  Com- 
pany, acting  for  that  institution, 
receiver  also  of  the  bank.     But  this 
was  not  the  case.    The  receiver  of 
the  bank  was  to  act  for  all  the  cred- 
itors of  the  bank,  and  was  disinter- 
ested, except  as  to  the  one  claim  of 
the  Savings  Institution.     The  Trust 
Company  was  specially  created  by 
the  legislature,  in  part  to  aid  suit- 
ors and  the  court  by  assuming  the 
exercise  of  trusts  when  it  might  be 
difficult  to  get  others  to  execute 


them  (as  in  this  case),  on  account  of 
the  largeness  of  the  amount  of  se- 
curity that  would  be  required,  and 
the  difficulty  of  obtaining  persons 
competent  to  give  such  security, 
and  to  manage  such  affairs.  More 
skillful  persons  to  take  charge  of  a 
trust  like  this,  or  more  trustworthy, 
probably  could  not  be  found.  The 
papers  on  the  appeal  show  no  ob- 
jection to  them ;  nor  that  any  oth- 
ers were  even  named.  And  as 
there  is  no  unbending  rule  of  law 
that  one  who  is  a  creditor  of  an  in- 
solvent institution  shall  not  be  its 
receiver,  the  objection  to  the  re- 
ceiver falls  to  the  ground.  The 
Trust  Company  being  lawfully  ap- 
pointed receiver,  and  deriving  its 
appointment  from  the  court,  or 
from  a  justice  of  the  court,  it  had  a 
right  to  apply  to  the  court  for  in- 
structions. And  in  no  case  could  it 
be  more  proper  for  the  receiver  to 
make  the  application  than  when  it 
was  the  representative  of  both  cred- 
itor and  debtor." 

2  Sutton  v.  Jones,  15  Ves.,  584; 

v.  Jolland,  8  Ves.,  72;  Sykes 

v.  Hastings,  11  Ves.,  363. 

3 v.  Jolland,  8  Ves.,  72. 


70  receivers.  [chap.  m. 

this  aversion  to  the  appointment  of  such  persons  to  receiv- 
erships is  found  in  the  fact  that  the  court,  in  this  class  of 
cases,  expects  the  trustee  to  watch  the  proceedings  with  an 
adverse  eye,  and  to  see  that  the  receiver  does  his  duty.1  The 
rule  rejecting  such  persons  is,  however,  not  inflexible,  and 
when  it  is  apparent,  considering  the  trustee's  knowledge  of 
and  familiarity  with  the  estate  in  litigation,  that  its  best 
interests  will  be  promoted  by  his  appointment,  a  departure 
from  the  rule  is  allowed.2  But  it  is  held  in  such  cases  that 
the  trustee  can  only  be  allowed  to  act  as  receiver,  upon 
condition  that  he  shall  derive  no  emolument  from  the  office.3 
As  illustrative  of  when  such  a  departure  from  the  rule  is 
permissible,  it  was  held,  where  a  testator  had  appointed  as 
trustee  and  executor  of  his  will  a  person  who  had  for  many 
years  acted  as  receiver  of  certain  of  his  property,  that  he 
was  a  fit  person  to  be  continued  as  receiver  for  the  protec- 
tion of  an  infant  tenant  for  life.4 

§  75.  It  has  been  shown  in  the  preceding  section  that 
the  reason  for  the  refusal  of  the  courts  to  appoint  as  receiv- 
ers persons  occupying  fiduciary  relations  to  the  subject- 
matter  of  the  receivership  is  based  upon  the  necessity  of 
their  watching  the  proceedings  of  the  receiver  adversely, 
and  holding  him  to  a  strict  account  in  the  performance  of 
his  duties.  The  same  reasoning  is  applicable  to  the  case  of 
a  bill  filed  by  the  next  friend  of  infants,  against  the  exec- 
utors of  their  estate,  for  an  accounting  and  a  receiver.  And 
in  such  a  case  the  next  friend  will  not  be  appointed,  since  it 
is  his  duty  to  watch  the  accounts  and  scrutinize  the  conduct 
of  the  receiver,  and  the  two  characters  are  regarded  as  so 
incompatible  writh  each  other  that  the  court  will  not  permit 
ihem  to  be  combined  in  one  and  the  same  person.5 

§  76.  An  apparent  exception  to  the  rule  that  trustees  are 
ineligible  as  receivers  over  the  subject-matter  of  their  trust, 

>  Sykes  v.  Hastings,  11  Ves.,  363.  3  Hibbert  v.  Jenkins,  11  Ves.,  363. 

2Hibbert    v.    Jenkins,    cited    in  *  Newport  v.  Bury,  23  Beav.,  30. 

Sykes  v.   Hastings,   11  Ves.,  363;  5  Stone  v.  Wishart,  2  Madd.,  63, 

Newport  v.  Bury,  23  Beav.,  30.  1st  American  Edition,  374. 


CHAP.  III.]  SELECTION   AND   ELIGIBILITY.  Tl 

has  been  recognized  in  the  case  of  a  mortgagee  of  real 
estate,  occupying  the  relation  of  a  trustee  of  the  equity  of 
redemption.  And  such  mortgagee  has  been  appointed  re- 
ceiver of  the  mortgaged  premises,  but  his  position  and  duties 
as  receiver  were  held  to  be  paramount  to  those  as  mort- 
gagee, and  his  interest  in  the  latter  capacity  was  held  to  be 
subordinate  to  his  duties  as  receiver.1 

§  77.  The  position  of  a  receiver  of  the  estate  and  effects 
of  a  debtor,  appointed  under  proceedings  in  a  state  court,  is 
regarded  as  incompatible  with  that  of  a  trustee  or  assignee 
of  the  estate  of  the  same  debtor  in  bankruptcy.  And  when 
proceedings  in  bankruptcy  are  subsequently  instituted  against 
the  debtor  in  the  federal  court,  the  latter  tribunal  will  not 
permit  the  receiver  of  the  state  court  to  be  elected  assignee 
or  trustee  of  the  bankrupt's  estate.2 

§  78.  In  partnership  cases,  the  administrator  of  a  deceased 
partner,  if  a  fit  person  in  other  respects,  may  be  appointed 
receiver  of  the  firm  assets,  when  the  surviving  partners  are 
guilty  of  laches  and  waste  in  the  settlement  of  the  business. 
For  while,  primarily,  such  administrator  has  no  rights  in 
the  settlement  and  adjustment  of  the  partnership  affairs, 
yet  if  there  be  unreasonable  delay  in  the  performance  of 
this  duty  by  the  surviving  partners,  it  becomes  the  right  and 
duty  of  the  administrator  of  the  deceased  partner  to  file  a 
bill  for  an  accounting  and  a  receiver,  and  he  himself  may 
then  be  appointed  upon  giving  additional  bond  with  proper 
security.3 

§  79.  Where  the  bill  prays  for  the  appointment  of  a  par- 
ticular person  as  receiver,  and  such  person  is  appointed  by 
the  court,  it  does  not  necessarily  follow  that  he  was  ap- 
pointed solely  because  recommended  in  the  bill.  And  in 
such  case,  on  appeal  to  a  court  of  last  resort,  it  will  be  pre- 
sumed that  the  court  below  acted  upon  its  own  judgment  in 

iBoUesv.  Duff,  54  Barb.,  215.  diet,   5G6;    S.   C,   6    Bank.    Reg., 

2  In  re  Stuyvesant  Bank,  5  Bene-    272. 

3  Miller  v.  Jones,  39  111.,  54. 


72  RECEIVERS.  [CHAP.  III. 

making  the  selection.1  But  in  the  Irish  Chancery,  it  is  said 
to  be  contrary  to  the  practice  of  the  court  to  appoint  as  re- 
ceiver a  particular  person  who  is  nominated  by  consent  oi 
the  parties.2 

§  80.  The  interest  of  a  stockholder  and  director  in  a 
banking  corporation,  which  was  the  plaintiff  in  the  action, 
has  been  regarded  as  sufficient  to  disqualify  him  for  the 
post  of  receiver.  Although  in  such  case,  where  the  interest 
was  not  known  to  the  court  at  the  time  of  appointment,  and 
he  had  entered  upon  his  duties  and  spent  much  time  in 
familiarizing  himself  with  the  property,  and  no  misconduct 
or  impropriety  was  shown,  he  was  allowed  to  continue  in 
office  until  a  new  reference  could  be  had  to  a  master,  to 
make  a  new  appointment.3 

§  81.  Notwithstanding  the  general  doctrine  regarding 
receivers  as  impartial  persons  between  the  parties,  and  not 
interested  in  the  result  of  the  cause,  there  may  be  circum- 
stances justifying  the  appointment  of  a  party  in  interest. 
And  a  mortgagee  of  estates  located  in  the  West  Indies  was, 
in  one  case,  deemed  a  proper  person  to  be  appointed  in 
England  as  receiver  of  the  mortgaged  property,  and  with- 
out requiring  him  to  give  the  usual  security.4 

i  Johns  v.  Johns,  23  Ga.,  31.  'Bank  of  Monroe  v.  Schermer- 

2 Leach  v.  Tisdal,  4  Ir.  Ch.,  N.  S.,    horn,  Clarke  Ch.,  366. 
209.  4  Davis  v.  Barrett,  13  L.  J.,  N.  S. 

Ch.,  304. 


CHAPTEE  IT. 

OF  THE  PRACTICE. 

I.  General  Rules  of  Practice, §82 

II.  Time  of  Appointment, 103 

in.  Notice  of  the  Application, Ill 

I.  General  Rules  of  Practice. 

§  82.     Practice  divergent  in  different  states. 

83.  Generally  appointed  on  bill ;  specific  prayer  not  necessary. 

84.  Appointment  made  on  notice  and  affidavits ;  and  only  against  a 

party. 

85.  Affidavits;  admissibility  oi,  upon  hearing. 

86.  Imperfections  in  bill  or  record  no  bar  to  appointment. 

87.  Order  should  specify  over  what  property  receiver  is  appointed. 

88.  Facts  need  not  appear  in  pleadings ;  affidavits ;  copies. 

89.  Affidavits  should  be  distinct  and  precise ;  general  allegations  not 

sufficient ;  information  and  belief . 

90.  Reference  to  master  to  appoint ;  exceptions  to  master's  appoint- 

ment. 

91.  Successive  applications  for  receiver. 

92.  When  motion  reheard  after  appointment. 

93.  Practice  on  extending  receivers. 

94.  Appointment  by  consent. 

95.  Effect  of  demurrer  pending ;  amendment  to  bill. 

96.  English  practice  as  to  hearing  in  court  and  in  chambers. 

97.  Regularity  of  original  appointment  not  examined  on  motion  to 

substitute. 

98.  Receiver  may  be  appointed  on  application  for  an  injunction. 

99.  Omission  of  receivers  to  be  sworn  not  fatal. 

100.  Order  of  appointment  should  not  apply  proceeds  of  sale. 

101.  Appointment  no  bar  to  plaintiff  dismissing  his  bill. 

102.  Order  made  in  the  alternative. 

§  82.  In  a  general  treatise  upon  the  law  of  receivers,  it 
is  neither  expedient  nor  desirable  to  present  in  detail  the 
practice  prevailing  in  the  different  states  in  administering 
this  species  of  relief,  since  this,  like  most  other  questions  of 


74  RECEIVERS.  [CHAP.  IV. 

practice,  is  largely  regulated  by  statute  and  usage  in  the 
different  states.  Indeed,  it  is  practically  impossible  to  re- 
duce to  a  harmonious  system  of  rules  all  questions  of  prac- 
tice relating  to  the  appointment  of  receivers,  since  the 
practice  and  procedure  in  administering  equitable  relief  are 
widely  divergent  in  the  various  states.  Some  general  prin- 
ciples, however,  which  are  believed  to  be  recognized  by 
most  of  the  courts  may  be  deduced  from  the  authorities,  and 
their  presentation  will  occupy  the  following  chapter.1 

§  83.  The  usual  practice,  both  in  England  and  America, 
is  to  appoint  receivers  only  upon  bills  filed  for  that  purpose, 
and  as  a  general  rule  the  courts  will  not  grant  the  relief 
merely  upon  petition,  when  no  cause  is  actually  pending 
and  no  bill  filed  to  give  the  court  jurisdiction,  unless  in 
very  special  cases  of  emergency.2  And  since  a  suit  in 
chancery  is  not  begun  until  the  filing  of  the  bill,  if  a  re- 
ceiver is  appointed  upon  an  ex  parte  application  before  the 
bill  is  filed,  the  appointment  will  be  revoked  upon  appeal, 
without  considering  the  merits  of  the  application. 3    And  it 

1In  California,  it  is  held,  under  seizure  of  the  property  by  a  re- 

the  statutes  of  the  state,  that  a  ceiver  subsequently  appointed  in  a 

judge  at  chambers  has  power  to  federal    court    is    no    interference 

appoint  a  receiver,  and  upon  an  ex  with  the  state  court.     Hammock 

parte  application.     Real  Estate  As-  v.  Loan  and  Trust  Co.,  105  U.  S., 

sociates  v.  Superior  Court,  60  Cal.,  77.     In  Indiana,  it  is  held  that,  un- 

223.     In  Virginia,  the  power  to  ap-  der    the    code    of    procedure,    the 

point  a    receiver    in  a    judgment  courts    have  the    same    power  to 

creditor's  suit  is  incidental  to  the  appoint  receivers,  and  for  the  same 

power  of  granting  an  injunction ;  purposes,  as  pertained  to  courts  of 

and  since  a  judge  may  grant  an  equity  prior  to  the  adoption  of  the 

injunction  in  vacation,  he  may  also  code.     Bitting  v.  Ten  Eyck,  85  Ind.f 

appoint    a   receiver    in    vacation.  357.     And  see  this  case  as  to  the 

Smith  v.  Butcher,   28  Grat.,    144.  practice  and  procedure  in  appoint- 

The  appointment  of  a  receiver  in  ing  receivers  in  Indiana.     To  the 

vacation  is  not  warranted  by  the  same  point,  see  Hursh  v.  Hursh, 

statutes  of  Illinois  prescribing  the  99  Ind.,  500. 

powers  which  may  be  exercised  by  2  Ex  parte   Mountfort,  15  Ves., 

circuit  judges  in  vacation.     There-  445 ;  Leddel's  Executor  v.  Starr,  4 

fore,  an  order  of  a  state  court  ap-  C.  E.  Green,  159. 

pointing  a  receiver  over  a  railway  3Crowder  v.  Moone,  52  Ala.,  220. 
in  vacation  is  a  nullity,  and  the 


CHAP.  IV.J  PRACTICE.  <  5 

has  been  held  in  England,  that  the  court  has  no  power  to 
appoint  a  receiver  upon  the  application  of  a  defendant  in  a 
cause,  even  though  the  plaintiff,  after  filing  his  bill  for  a 
receiver  against  the  defendant,  refuses  to  move  for  a  re- 
ceiver and  opposes  defendant's  application.1  It  is  not,  how- 
ever, indispensable  that  the  bill  should  contain  a  specific 
prayer  for  a  receiver,  if  the  facts  stated  are  sufficient  to 
justify  the  appointment,  since  the  necessity  for  the  relief 
frequently  occurs  after  the  filing  of  the  bill.2  And  a  re- 
ceiver may  be  appointed  at  the  final  hearing,  even  though 
the  bill  contains  no  prayer  for  such  relief.3 

§  84.  It  is  irregular  to  appoint  a  receiver  when  no  mo- 
tion for  that  purpose  has  been  made,  and  no  proof  adduced 
showing  a  necessity  for  the  relief.  And  the  motion  should 
properly  be  founded  on  affidavits  or  papers,  copies  of  which 
should  be  served  with  the  notf ce  of  the  application ;  although 
if  the  papers  on  which  the  moving  party  seeks  the  relief  are 
already  on  file  in  the  cause,  it  is  sufficient  to  refer  to  them 
in  the  notice.4  But  a  receiver  should  not  be  appointed 
against  a  person  not  before  the  court,  and  not  made  a  party 
to  the  action  in  which  the  appointment  is  sought.5 

§  85.  Upon  an  application  for  a  receiver  after  the  coming 
in  of  the  answer,  it  is  proper  for  the  court  to  permit  affi- 
davits to  be  read  in  behalf  of  plaintiff,  since  the  object  of 
the  court  is  to  be  informed  of  the  true  circumstances  of  the 
case,  in  order  that  it  may  act  advisedly  upon  the  applica- 


i  Robinson  v.  Hadley,  11  Beav.,  v.  Corbett,  5  Sawyer,  172.    But  see 

614.    But  upon  a  bill  by  a  second  Augusta   Ice    Manufacturing   Co. 

mortgagee  for  a  foreclosure,  a  de-  v.  Gray,  60  Ga.,  344. 

fendant,  who  was  a  prior  mort-  3  See    observations  of  the  Vice- 

gagee,  has  been  allowed  a  receiver  Chancellor  in  Osborne  v.  Harvey, 

against  the  mortgagor  also  joined  1  Y.   &  C.   C.  C,  116;  Merrill  v. 

as  defendant.     Henshaw  v.  Wells,  Elam,  2  Tenn.  Ch.,  513.     See,  also, 

9  Humph.,  568.  Bowman  v.  Bell,  14  Sim.,  392. 

2  Henshaw  v.  Wells,  9  Humph.,  *Hungerford  v-  Cushing,  8  Wis., 

568 ;  Ladd  v.  Harvey,  21  N.  H,  514 ;  320. 

Malcolm  v.   Montgomery,  2  Mol.,  » Gravenstine'e  Appeal,  49  Pa.  St., 

500 ;  Commercial  and  Savings  Bank  310. 


76  KECEIVEKS.  [CHAP.  IV. 

tion.1  In  the  Irish  Chancery,  upon  a  motion  for  a  receiver 
on  bill  and  answer,  affidavits  may  be  read  in  behalf  of 
plaintiff  in  reply  to  the  answer,  in  explanation  of  a  doubt- 
ful passage  therein,  which  does  not  disclose  the  whole  truth 
to  the  court,  the  affidavit  disclosing  all  the  facts.2 

§  86.  The  fact  that  the  bill  on  which  an  injunction  and 
a  receiver  are  sought  is  multifarious,  or  that  it  is  liable  to 
objection  because  of  misjoinder  of  parties,  constitutes  no 
sufficient  objection  to  a  motion  for  a  receiver.  JSor  is  it  a 
sufficient  answer  to  the  application  that  the  record  is  in- 
complete in  particulars,  or  not  in  such  shape  as  may  be 
necessary  to  enable  the  court  to  administer  complete  justice 
between  the  parties.3 

§  87.  The  order  of  appointment  should  distinctly  state 
upon  its  face  over  what  property  or  fund  the  receiver  is 
appointed,  in  order  that  persons  dealing  with  him  may  know 
what  property  is  in  possession  of  the  court  by  its  officer.4 
And  an  order  appointing  a  receiver  of  the  "incomes  of  the 
outstanding  trust  property  in  the  pleadings  mentioned,"  is 
not  sufficiently  distinct  and  explicit  within  the  meaning  of 
the  rule.5 

§  88.  It  is  not  regarded  as  necessary  or  essential  to  the 
appointing  of  a  receiver  that  the  facts  upon  which  the  ap- 
plication is  based  should  be  set  forth  in  the  pleadings,  but  it 
is  sufficient  if  they  are  presented  to  the  court  by  affidavit 
upon  the  hearing  of  the  motion.  Indeed,  this  would  seem 
to  follow  necessarily  from  the  very  nature  of  the  appoint- 
ment, which  is  usually  treated  as  an  auxiliary  proceeding, 
and  not  the  ultimate  object  of  the  action.5    But  it  is  not 

•  Ladd  v.  Harvey,  21  N.  H.,  514.        sCrow  v.  Wood,  13  Beav.,  271. 

2 Bell  v.  M'Loghlin,  Flan.  &  K,  6 Hottenstein  v.  Conrad,  9  Kan., 

272.  435.     This  was  an  action  for  the 

3  Evans  v.  Coventry,  5  DeG. ,  M.  &  settlement  of  partnership  affairs, 

G.,  911,  reversing  S.  C,  3  Drew.,  75.  in  which  a  receiver  was  appointed 

*  Crow  v.  Wood,  13  Beav.,  271;  upon  notice  and  motion,  supported 
O'Mahoney  v.  Belmont,  62  N.  Y.,  by  affidavits.  Brewer,  J.,  says,  p. 
133,  affirming  S.  C,  37  N.  Y.  Supr.  438:  "  It  is  objected  that  the  peti- 
Ct.  R.,  223.  tion  contains    no   averment   that 


CHAP.  IV. ]  PRACTICE.  T7 

sufficient  in  the  application  for  a  receiver  to  allege  merely 
the  legal  conclusions  upon  which  plaintiff  relies,  and  the 
facts  must  be  averred  upon  which  such  conclusions  are 
predicated.1  And  where,  under  the  practice  of  the  state, 
the  appellate  court  or  court  of  final  resort  rehears  and  de- 
cides cases  upon  the  merits,  upon  an  appeal  from  an  order 
granting  an  injunction  and  appointing  a  receiver,  copies  of 
the  affidavits  and  testimony  upon  which  the  motion  was 
granted  should  accompany  the  record.2  And  such  affida- 
vits can  only  be  considered  by  an  appellate  tribunal,  upon 
an  appeal  from  an  order  appointing  a  receiver,  when  prop- 
erly incorporated  into  the  record,  as  by  a  bill  of  exceptions.3 
§  89.  Affidavits  upon  which  the  application  is  based 
should  be  distinct  and  precise  in  their  allegations,  espe- 
cially where  fraud  is  one  of  the  grounds  relied  upon  for  the 
interference  of  the  court.  And  where  a  receiver  is  sought 
of  the  affairs  of  a  corporation,  mere  general  allegations,  in 
the  affidavits  supporting  the  motion,  as  to  the  belief  of 
affiants  that  great  frauds  have  been  committed  against  the 
corporation,  will  not  justify  the  relief,  when  it  is  not  stated 
by  whom  the  frauds  have  been  committed,  or  in  what  they 
consist.4  Where,  however,  under  the  laws  of  a  state  it  is 
made  the  duty  of  the  attorney-general,  upon  the  insolvency 
of  a  banking  corporation,  to  apply  for  an  injunction  and  a 
receiver  for  the  winding  up  of  its  affairs,  it  is  not  necessary 
that  the  information  filed  by  the  attorney-general  for  this 


there  was  danger  that  the  property  pointed    .     .    in  the  action,'  etc. 

would  be  wasted  or  injured  before  All  that  the  pleadings  need  disclose 

the  answer,  or  before  the  trial  of  is,  that  the  action  pending  is  one  of 

the  case.     Such  an  averment  was  a  class  in  which  the  statute  says  a 

entirely  unnecessary.    The  showing  receiver  may  be  appointed." 

of  the  necessity  for  a  receiver  need  l  Heavilon  v.  Farmers'  Bank,  81 

not    be   in  the  petition.    The  ap-  Ind.,  249. 

pointment  of  a  receiver  is  a  pro-  2Schlecht's  Appeal,   60  Pa.  St., 

visional  remedy.    It  is  an  auxiliary  172. 

proceeding.    It  is  not  the  ultimate  'Barnes  v.  Jones,  91  Ind.,  161. 

end  or  object  of  a  suit.    The  stat-  4  Oakley    v.   Patterson    Bank,    1 

ute  says,    'a  receiver  may  be  ap-  Green  Ch.,  173. 


78  RECEIVERS.  [CHAP.  IT. 

purpose  should  be  verified  by  a  positive  affidavit  as  to  the 
insolvency  of  the  bank,  but  it  is  sufficient  that  it  is  alleged 
upon  information  and  belief,  since  only  the  officers  of  the 
bank  can  swear  positively  as  to  its  condition.1 

§  90.  Under  the  English  practice,  as  well  as  under  the 
chancery  practice  in  New  York  prior  to  the  adoption  of  the 
code  of  procedure,  it  was  customary  to  grant  an  order  of 
reference  to  a  master  for  the  purpose  of  nominating  or  ap- 
pointing a  receiver.  Under  the  New  York  practice,  when 
the  matter  was  referred  to  a  master  to  report  a  proper  per- 
son to  be  appointed,  the  appointment  was  not  regarded  as 
complete  until  confirmed  by  special  order  of  the  court. 
"Where,  however,  the  master  was  himself  directed  to  appoint 
the  receiver  and  to  take  from  him  the  requisite  security,  no 
confirmation  of  the  appointment  was  necessary.  In  the 
latter  case  the  master,  after  approving  of  the  receiver  and 
the  sureties  offered,  took  the  necessary  bond,  which  he  filed 
with  the  report  of  his  appointment,  stating  that  he  had  ap- 
proved of  the  bond  and  that  it  was  duly  filed.  And  upon 
the  filing  of  such  report  the  appointment  was  deemed  com- 
pleted and  the  receiver  might  at  once  enter  upon  his  duties. 
If  either  party  was  dissatisfied  with  the  master's  appoint- 
ment, the  practice  seems  to  have  been  to  present  his  objec- 
tions to  the  court  by  a  petition,  upon  due  notice  to  all  parties 
in  interest,  praying  that  the  master  might  review  his  report.2 
Under  the  English  practice,  when  a  reference  was  had  to  a 
master  with  directions  to  appoint,  the  appropriate  practice 
in  objecting  to  the  master's  action  was  by  exceptions  to  his 
report.3 

§  91.  It  is  proper  on  denying  a  motion  for  a  receiver  to 
give  leave  to  the  moving  party  to  renew  his  motion  upon 
additional  proof,  if  it  appears  that  he  may,  by  obtaining 
new  proof,  present  a  strong  case  for  the  relief   sought.4 

1  Attorney-General  v.  Bank  of  3Creuze  v.  Bishop  of  London, 
Columbia,  1  Paige,  511.  Dick.,  687. 

2  In  re  Eagle  Iron  Works,  8  Paige,  4  Devlin  v.  Hope,  16  Ab.  Pr., 
385.  314 


CHAP.  IV.]  PEACTICE.  T9 

And  it  is  competent  for  plaintiff  to  ask  and  for  the  court  to 
appoint  a  receiver  after  a  hearing,  and  even  after  a  rehear- 
ing and  refusal,  when  an  altered  state  of  facts  is  presented 
showing  an  appropriate  case  for  the  relief.1  But  when  the 
application  has  once  been  before  the  court  and  has  been 
denied,  a  receiver  will  not  be  appointed  upon  a  subsequent 
application  upon  a  simple  notice  for  that  purpose,  founded 
upon  the  same  papers  as  before,  without  affidavits  or  addi- 
tional proof  showing  a  necessity  for  the  relief.  And  this 
rule  holds  good,  even  though  the  court  may  have  intimated, 
on  the  former  application,  that  a  receiver  might  afterwards 
be  granted  if  circumstances  should  warrant  it.2 

§  92.  After  a  receiver  has  been  appointed  upon  motion, 
pending  an  action  against  defendant,  it  is  proper  for  the 
court  to  entertain  an  application  to  open  and  rehear  the 
motion  for  the  receiver,  and  to  allow  defendant  to  introduce 
proofs  which  could  not  be  produced  upon  the  former  hear- 
ing. And  if  satisfied  that  the  case  is  not  a  proper  one  for 
a  receiver,  the  court  may,  upon  such  rehearing,  deny  the 
motion.3  But,  since  a  motion  for  a  receiver  in  a  creditor's 
suit  is  not  regarded  as  involving  the  merits  of  the  cause, 
being  only  incidental  to  the  principal  relief  sought,  where 
the  courts  are  prohibited  by  statute  from  rehearing  orders 
made  in  the  progress  of  a  cause  which  do  not  involve  the 
merits,  a  motion  for  a  receiver  will  not  be  reheard  when 
once  granted.4 

§  93.  The  practice  is  frequently  adopted,  when  a  receiver 
has  been  appointed  over  a  particular  subject-matter  in  behalf 

1  Attorney-General  v.  Mayor  of  time,  and  before  any  remittitur  has 

Galway,  1  Mol.,  95.  been  returned  from  the  supreme 

2Fenton  v.  Lumberman's  Bank,  court,  to  appoint  a  receiver  upon 

Clarke  Ch.,  360.    In  Georgia,  it  is  the  same  bill  and  upon  the  same 

held  that  when  an  application  for  state  of  facts.      McCaskill  v.  War- 

a  receiver  made  in  vacation  is  con-  ren,  58  Ga.,  286. 

tinued  to  the  hearing,  and  a  writ  of  3  Belmont  v.  Erie  R.  Co.,  52  Barb. , 

error  is  sued  out  to  reverse  such  637. 

order  of  continuance,  it  is  compe-  4  Sheldon   v.    "Weeks,    2    Barb., 

tent  for  the  court  below  in  term  532. 


80  RECEIVERS.  [CHAT.  IV. 

of  one  creditor  or  a  class  of  creditors,  of  extending  the 
same  receiver  for  the  protection  of  other  parties  interested 
in  the  same  subject-matter,  for  the  purpose  of  saving  the 
expense  of  a  new  appointment ;  or,  if  appointed  over  a  part 
only  of  defendant's  estate,  he  may  be  extended  over  the 
residue  for  the  benefit  of  other  creditors.  In  all  such  cases, 
the  order  extending  the  receiver  is  regarded  as  substantially 
an  original  or  new  appointment.1 

§  94.  Under  the  Irish  chancery  practice,  receivers  are 
frequently  appointed  by  consent  of  the  parties  to  a  cause, 
the  consent  in  such  cases  being  made  a  rule  of  court.2  But 
such  a  consent  will  not  be  made  a  rule  of  court  when  it  pro- 
vides that  the  receiver  shall  not  be  obliged  to  account  before 
the  master,  unless  called  upon  so  to  do,  since  this  would  in 
effect  make  him  merely  the  private  agent  of  the  parties, 
and  not  an  officer  of  court.3 

§  95.  Upon  a  special  motion  for  a  receiver,  when  notice 
has  been  given  to  defendant's  solicitor,  who  does  not  appear 
or  oppose  the  motion,  the  fact  of  a  demurrer  pending  to  the 
bill  affords  no  objection  to  granting  the  order;  since,  if  de- 
fendant intends  to  rely  upon  such  demurrer  as  a  bar  to  the 
appointment,  he  should  appear  upon  the  hearing  of  the  mo- 
tion and  urge  his  objections.4  And  when  an  answer  has 
been  filed  to  the  original  bill,  the  court  will  entertain  a  mo- 
tion for  a  receiver,  notwithstanding  the  original  bill  has 
been  amended  after  answer,  and  a  plea  has  been  filed  to  the 
amended  bill  and  the  plea  is  still  undisposed  of.5 

§  96.  Under  the  English  practice  it  is  held  that,  when 
the  application  for  a  receiver  is  made  for  the  first  time  in 
the  cause,  it  must  be  heard  in  court;  but  if  the  application 

1  Corbet  v.  Mahon,  2  Jo.  &  Lat.,  ~  See  Burke  v.  Burke,  Flan.  &  K., 

C71 ;  Agra  &  Masterman's  Bank  v.  89. 

Barry,  Ir.  Rep.,  3  Eq.,  443.     See,  3Richey  v.  Gleeson,  Ran.  &  K., 

also,    Imperial    Mercantile    Credit  99. 

Association  v.  Newry  &  Armagh  R.  4  Howard      v.     Palmer,     Walk. 

Co.,  Ir.  Rep.,  2  Eq.,  1;  LeGrand  r.  (Mich.),  391. 

O'Neill,  2 It.  Ch.,  N.  S.,  569;  Abbott  5  Thompson    v.   Selby,    12   Sim., 

v.  Stratten,  3  Jo.  &  Lat.,  G03.  100. 


CHAP.  IV.]  PEACTICE. 


SI 


is  only  to  supply  the  place  of  a  receiver  already  appointed, 
and  whose  office  has  become  vacant  by  death  or  otherwise, 
it  may  be  made  in  chambers.1 

§  97.  Upon  a  mere  formal  motion  to  substitute  one  per- 
son in  place  of  another  as  receiver  in  the  action,  the  oppos- 
ing party  is  not  at  liberty  to  examine  the  regularity  of  the 
original  appointment,  or  the  regularity  of  the  proceedings 
had  in  the  suit,  since  this  would  operate  as  a  surprise  upon 
the  moving  party,  and  he  is  entitled  to  notice  of  such  objec- 
tions.2 

§  98.  It  would  seem  that  a  receiver  may  be  appointed  in 
a  case  otherwise  proper  for  the  relief,  if  the  facts  showing 
the  necessity  for  the  relief  and  the  proper  parties  are  before 
the  court,  although  the  application  was  mp.de  for  an  injunc- 
tion, and  did  not  specify  the  appointment  of  a  receiver.3 

§  99.  Where  a  statute,  authorizing  the  appointment  of 
receivers  to  wind  up  the  affairs  of  banking  corporations,  re- 
quires them  to  be  sworn  before  entering  upon  their  duties, 
the  omission  to  be  sworn  does  not  have  the  effect  of  viti- 
ating their  proceedings,  since  they  are  officers  of  the 
court  and  their  proceedings  are  subject  to  revision  by  the 
court.4 

§  100.  As  regards  the  form  of  an  order  appointing  a  re- 
ceiver and  authorizing  him  to  sell  the  property  in  contro- 
versy, it  would  seem  to  be  the  better  practice  not  to  include 
in  such  order  a  direction  as  to  applying  the  proceeds  of  the 
sale,  since  this  is  a  matter  for  adjustment  after  a  final  decree 
settling  the  rights  of  all  parties  in  interest.5 

§  101.  When  a  receiver  is  appointed  upon  an  interlocu- 
tory application,  before  final  decree  in  the  cause,  the  court 
does   not  thereby  acquire  such  absolute  control   over  the 

1  Grote  v.  Bing,  9  Hare,  Appcn-  3  Whitney  v.  Buckman,  2G  Cal., 
dix.  1.  447. 

2Fassett  v.  Tallmadge,  13  Ab.  Pr.,  *  American  Bank  v.  Cooper,  54 
12.  Me.,  438. 

»  West  v.  Chasten,  12  Fla.,  315. 
G 


82 


RECEIVERS. 


[chap.  IV. 


cause  as  to  deprive  plaintiff  in  the  action  of  the  privilege 
of  dismissing  his  bill  if  he  sees  fit.1 

§  102.  There  are  frequent  instances  to  be  met  "with  in  the 
reports  where  the  court,  although  of  opinion  that  plaintiff 
was  entitled  to  a  receiver,  has  made  the  order  in  the  alter- 
native, requiring  defendant  to  satisfy  plaintiff's  demand,  or 
in  default  thereof  that  a  receiver  be  appointed.2 

1  White  v.  Lord  Westmeath,  2See  for  such  a  case,  Curling  v. 
Beat.,  174.  Townshend,  19  Ves.,  628. 


CHAP.  IV.]  PRACTICE.  S3 


II.  Time  of  Appointment. 

§  103.  Formerly  appointed  only  after  answer ;  modern  English  practice. 

104.  Grounds  for  appointment  before  answer  under  English  practice. 

105.  Granted  before  answer  in  this  country;  creditors'  suits. 

106.  Strong  case  must  be  shown  to  warrant  relief  before  answer; 

illustrations, 

107.  Application  before  answer  heard  on  affidavits;  motion  to  dis- 

charge receiver  after  answer. 

108.  Appointment  not  to  be  antedated. 

109.  May  be  made  at  the  final  hearing. 

110.  Allowed  after  final  decree  in  cases  of  emergency;  illustrations. 

§  103.  Receivers  are  usually  appointed  upon  interlocutory 
application,  in  the  earlier  stages  of  the  cause,  although,  as 
will  hereafter  be  shown,  the  appointment  may  be  made  at 
the  final  hearing,  and  as  a  part  of  the  final  decree.  Under 
the  earlier  English  practice,  the  court  would  not  entertain  an 
application  for  a  receiver  until  after  defendant  had  appeared 
and  answered.  The  rule,  however,  wras  gradually  relaxed, 
and  under  the  modern  practice  receivers  were  frequently 
granted  before  answer.  And  although  the  English  Court  of 
Chancery  was  always  averse  to  interference  before  answer, 
unless  for  good  cause  shown,  yet  it  may  be  regarded  as  the 
settled  English  practice  to  grant  receivers  before  answer,  in 
cases  of  emergency  calling  for  the  immediate  interference 
of  the  court  to  protect  the  equities  of  plaintiffs,  and  where 
the  merits  of  the  case  are  sufficiently  disclosed  by  affidavits.1 

1  Vann  v.  Barnett,  2  Bro.  C.  C.,  He  seems,  however,  to  have  fallen 
158 ;  Duckworth  v.  Trafford,  18  into  an  error  as  to  the  first  depart- 
Ves.,  283;  Metcalfe  v.  Pulvertoft,  ure  from  the  ancient  practice,  since 
1  Ves.  &  Bea.,  180;  Woodyatt  v.  Lord  Kenyon,  in  Vann  v.  Barnett, 
Gresley,  8  Sim. ,  180.  In  Duckworth  only  says  that  a  motion  for  a  re- 
?•.  Trafford,  Lord  El  don  observes  ceiver  before  answer  was  unusual, 
that  the  old  rule  of  not  granting  a  and  that  he  would,  if  necessary, 
receiver  before  answer,  was  first  have  made  a  precedent.  Vann  v. 
broken  through  by  Lord  Kenyon  in  Barnett  was  decided  in  1787,  and  in 
Vann  v.  Barnett,  and  that  the  order  a  note  to  the  case  as  reported  in  2 
then  made  for  a  receiver  before  Bro.  C.  C,  158,  it  is  said  by  the  re- 
answer  had  been  followed  since,  porter  that  a  receiver  before  answer 


SI 


RECEIVERS. 


[CHAP.  IV. 


And  if  defendant  has  put  in  an  affidavit  in  opposition  to 
plaintiff's  affidavits  upon  the  motion,  the  affidavit  will  be 
regarded  as  a  sufficient  appearance  for  the  purpose  of  enter- 
taining the  motion.1 

§  104.  As  regards  the  grounds  upon  which  the  applica- 
tion has  been  entertained  before  answer,  under  the  English 
practice,  it  has  been  held  that  where  plaintiff  shows  a  good 
equitable  title  to  the  property  in  controversy,  as  against 
which  the  title  of  defendant  can  not  prevail,  sufficient  cause 
is  presented.2  So  when  habitual  and  manifest  abuse  is 
shown  on  the  part  of  a  defendant  executor  in  the  manage- 
ment of  his  trust,  and  when  he  is  wasting  and  endangering 
the  property  entrusted  to  him,  a  receiver  may  be  appointed 
before  answer.3 

§  105.  The  modern  English  practice,  allowing  the  ap- 
pointment of  a  receiver  before  answer  in  cases  of  emergency, 
was  adopted  by  the  New  York  Court  of  Chancery,  and  has 
been  generally  followed  in  this  country.  And  it  may  now 
be  regarded  as  the  uniform  and  well-established  practice  to 
entertain  the  application  and  to  grant  the  relief  before  an- 
swer, where  plaintiff  can  satisfy  the  court  that  he  has  an 
equitable  claim  to  the  property  in  controversy,  and  that  a 
receiver  is  necessary  to  preserve  it  from  loss,  or  where  a 
clear  case  is  shown  of  fraud  and  imminent  danger  unless 
the  relief  is  granted.4     In  other  words,  if  the  emergency 


was  granted  by  Lord  Bathurst  in 
Compton  v.  Bearcroft,  Trinity 
Term,  1773. 

iVann  v.  Barnett,  2  Bro.  C.  C., 
158. 

2  Metcalfe  v.  Pulvertof  t,  1  Ves.  & 
Bea.,  180. 

3Middleton  v.  Dodswell,  13  Ves., 
266. 

^Bloodgood  v.  Clark,  4  Paige, 
574;  Bank  of  Monroe  v.  Schermer- 
horn,  Clarke  Ch.,  214;  Jones  v. 
Dougherty,  10  Ga.,  273;  Williams 
v.  Jenkins,  11   Ga.,  595;  Johns  v. 


Johns,  23  Ga.,  31 ;  Clark  v.  Ridgely, 
1  Md.  Ch.,  70.  See,  also,  Baker  v. 
Adm'r  of  Backus,  32  111.,  115,  116; 
Whitehead  v.  Wooten,  43  Miss., 
523;  Davis  v.  Browne,  2  Del.  Ch., 
188;  Probasco  v.  Probasco,  30  N.  J. 
Eq.,  108.  Bloodgood  v.  Clark,  4 
Paige,  574,  was  an  appeal  from  a 
decision  of  the  Vice-Chancellor,  re- 
fusing an  application  for  a  receiver 
of  the  property  and  effects  of  de- 
fendants in  a  creditor's  bill.  Wal- 
worth, Chancellor,  says,  p.  576: 
"The  Vice-Chancellor  was  wrong 


CHAP.  IV.] 


PRACTICE. 


85 


shown  is  such  as  to  render  it  essential  to  justice  that  a  receiver 
should  be  immediately  appointed,  it  may  be  done  before 
answer,  since  to  delay  the  relief  might  entirely  defeat  the 
object  sought  by  the  application.1  The  practice  is  especially 
salutary  in  cases  of  creditors'  bills  in  aid  of  the  enforcement 
of  judgments,  and  in  this  class  of  cases  receivers  are  almost 
uniformly  granted  before  answer.2 

§  106.  While  the  practice  of  appointing  receivers  before 
answer,  in  cases  of  emergency,  is  thus  shown  to  be  well- 
established  and  generally  followed  by  courts  of  equity  in  this 
country,  yet  the  grounds  which  will  induce  the  court  to 
interfere  at  this  stage  of  a  cause  must  be  very  strong,  and 
there  must  be  clear  proof  of  fraud,  or  of  immediate  danger 
to  the  property  unless  it  is  taken  into  the  custody  of  the 
court.3     And  when  there  are  no  allegations  of  defendant's 


in  supposing  that  a  receiver  could 
not  be  appointed,  in  a  case  of  this 
kind,  until  after  the  defendants  had 
put  in  their  answer.  By  the  an- 
cient practice  of  the  Court  of  Chan- 
cery in  England,  a  receiver  was  not 
appointed  until  after  the  coming  in 
of  the  defendant's  answer.  This 
practice  appears  to  have  been  first 
broken  in  upon  in  the  case  of 
Crompton  v.  Bearcroft,  in  1773. 
And  Lord  Kenyon,  the  master  of 
the  rolls,  appointed  a  receiver  be- 
fore answer  in  the  case  of  Vann  v. 
Barnett,  in  1787,  2  Brown's  C.  C, 
158.  He  said,  that  although  a  mo- 
tion for  a  receiver  before  answer 
was  then  unusual,  yet  had  it  been 
necessary  he  would  have  made  a 
precedent.  And  it  now  appears  to 
be  well  settled,  both  here  and  in 
England,  that  a  receiver  may  be  ap- 
pointed before  answer,  provided  the 
plaintiff  can  satisfy  the  court  that 
he  has  an  equitable  claim  to  the 
property  in  controversy,  and  that  a 


receiver    is  necessary  to  preserve 
the  same  from  loss." 

1  Johns  v.  Johns,  23  Ga.,  31. 

2  See  Bloodgood  v.  Clark,  4  Paige, 
574 ;  Bank  of  Monroe  v.  Schermer- 
horn,  Clarke  Ch.,  214. 

3  Clark  v.  Ridgely,  1  Md.  Ch.,  70 ; 
Brick  Company  v.  Robinson,  55 
Md.,  410;  Latham  v.  Chafee,  7  Fed. 
Rep.,  525;  AVest  v.  Swan,  3  Edw. 
Ch. ,  420 ;  Baker  v.  Adm'r  of  Backus. 
32  111.,  115,  116;  Beecher  v.  Binin- 
ger,  7  Blatchf.,  170;  Whitehead  r. 
Wooten,  43  Miss.,  523.  "The  ap- 
pointment of  a  receiver,"  says  Sim- 
rail,  J.,  in  the  case  last  cited,  "  is  a 
peremptory  remedial  measure.  Its 
effect  is  to  deprive  the  defendant 
in  possession,  temporarily  at  least, 
of  his  property,  before  final  decree 
settling  the  rights  of  parties  liti- 
gant. If  the  application  is  made 
before  the  merits  of  the  cause  are 
disclosed,  as  before  a  xtro  confesso 
or  answer  filed,  there  must  be 
strong  grounds  laid.     .     .     There 


86  RECEIVERS.  [CHAP.  IV. 

insolvency,  or  of  danger  to  the  property  and  interests  con- 
cerned, the  relief  will  not  be  granted  before  answer.1  So 
when  insolvency  is  the  ground  relied  upon,  but  the  affidavit 
on  which  the  application  is  based  merely  states  that  defend- 
ant is  not  deemed  a  responsible  man  by  those  who  know 
him,  and  the  affidavit  of  defendant  fully  negatives  the 
insolvency,  a  receiver  will  be  refused.2  And  in  an  action 
brought  by  a  shareholder  of  a  corporation  to  cancel  certain 
illegal  stock,  and  to  restrain  the  holders  of  such  shares  from 
assigning  or  encumbering  them,  the  appointment  of  a  re- 
ceiver of  the  shares  is  improper  upon  an  ex  parte  applica- 
tion before  answer,  when  it  is  not  shown  that  defendants 
are  irresponsible,  or  that  there  is  any  danger  of  loss  from 
a  transfer  of  the  shares.3 

§  107.  Interlocutory  applications  for  a  receiver  before 
answer  are  usually  supported  by  affidavits  of  the  grounds 
relied  upon,  and  it  would  ordinarily  seem  to  be  sufficient  if 
the  facts  upon  which  the  application  is  based  are  verified  by 
the  affidavit  of  plaintiff  alone.4  And  when  plaintiff  moves 
for  an  injunction  and  a  receiver  upon  bill  filed,  before  the 
coming  in  of  the  answer,  upon  grounds  of  emergency,  de- 
fendant may  be  heard  by  affidavit  in  opposition  to  the 
motion.5  If  the  appointment  is  made  before  answer,  it  is 
proper  for  the  defendant,  after  filing  his  answer,  to  move 
to  discharge  the  receiver;  and  if,  upon  such  motion,  the 
bill  and  answer,  taken  together,  show  that  a  receiver  ought 
not  to  have  been  appointed,  he  will  be  discharged.6 

§  108.  It  would  seem  that,  as  regards  the  rights  of  third 
persons,  the  appointment  of  a  receiver  will  not  be  allowed 
to  take  effect  or  date  back  by  relation  to  a  period  prior  to 

must  be  strong  and  special  reasons  2  West  v.  Swan,  3  Edw.  Ch.,  420. 

for  the  appointment  before  answer,  3  People    v.    Albany   &    Susque- 

as  on  proof  of  fraud,  by  affidavits  or  hanna  R.  Co.,  7  Ab.  Pr.,  N.  S.,  290. 

immediate  danger  to  the  property,  4  Jones    v.    Dougherty,    10    Ga., 

unless  at  once  ta^en  in  charge  by  273. 

the  court."  5Kean  v.  Colt,  1  Halst.  Ch.,  365. 

1  Simmons  v.  Wood,  45  How.  Pr.,  6 Phoenix  Mutual  Life  Insurance 

269.  Co.  v.  Grant,  3  MacArthur,  220. 


CHAP.  IV.]  PRACTICE.  87 

his  appointment.  It  is  therefore  improper  to  insert  such  a 
clause  in  the  order  of  appointment,  and  its  insertion  will 
not  be  allowed  to  affect  the  rights  of  parties  in  interest  and 
not  notified.1 

§  109.  Although  it  is  the  usual  practice  to  apply  for  a 
receiver  upon  interlocutory  motion,  yet  in  a  proper  case  the 
appointment  may  be  made  at  the  final  hearing,  and  as  a 
part  of  the  final  decree.2  Thus,  in  case  of  a  judgment  or 
decree  dissolving  a  partnership,  when  a  receiver  is  necessary 
to  wind  up  the  firm  business,  the  appointment  may  be  made 
as  a  part  of  the  decree  and  for  the  purpose  of  carrying  it 
into  effect.3  So  where  the  right  to  a  receiver  depends  upon 
questions  of  law  of  much  nicety,  as  well  as  questions  of 
title  which  are  involved  in  considerable  doubt,  the  court 
may  properly  refuse  the  application  in  limine,  and  leave  it 
to  be  determined  upon  a  final  hearing  of  the  cause.4  And 
the  appointment  may  be  made  at  the  final  hearing,  even 
though  the  bill  contains  no  prayer  for  a  receiver.5 

§  110.  While  it  rarely  happens  that  courts  are  called  upon 
to  appoint  a  receiver  after  a  final  decree  in  the  cause,  the 
power  of  appointment  after  decree  is  well  settled  and  is  ex- 
ercised in  cases  of  great  emergency,  or  where  the  relief  is 
indispensable  for  the  protection  of  the  parties  in  interest.6 
Thus,  in  an  action  brought  by  persons  beneficially  interested 
under  a  will,  against  the  trustees  and  executors,  to  have  the 
trusts  of  the  "will  performed  under  direction  of  the  court,  if 
after  decree  the  conduct  of  the  trustees  is  such  as  to  render 


i  Artisans'  Bank  v.  Tread  well,  34  Y.  &  C.   C.   C,    110;  Bowman  v. 

Barb.,  553.  Bell,  14  Sim.,  392. 

-  Shulte  v.  Hoffman,  18  Tex. ,  678 ;  G  Wright  v.  Vernon,  3  Drew. ,  112 ; 

Shee  v.  Harris,  1  Jo.  &  Lat.,  91.  Bowman    v.    Bell,    14    Sim.,  392; 

See,  also,  Bowman  v.  Bell,  14  Sim.,  Thomas  v.   Davies,    11  'Beav.,  29; 

392.  Connelly  v.  Dickson,  76  Ind.,  440; 

3  Shulte  v.  Hoffman,  18  Tex.,  678.  Brinkman    v.   Ritzinger,   82  Ind., 

4  Hawkins  v.  Luscombe,  2  Swans.,  358;  Schreiber  v.  Carey,  48  Wis., 
375.  208 ;  Haas  v.  Chicago  Building  So- 

s See    observations  of   the  Vice-  ciety,  89  111.,  498.   See,  also,  Hiles  v. 

Chancellor  in  Osborne  v.  Harvey,  1  Moore,  15  Beav.,  175. 


S8  RECEIVERS.  [CHAP.  IV. 

a  receiver  necessary,  the  court  will  entertain  the  application, 
even  though  the  bill  contains  no  prayer  for  a  receiver.1  So 
in  an  action  to  determine  the  conflicting  rights  of  parties  to 
real  estate,  "when  a  final  decree  has  been  rendered  establish- 
ing plaintiff's  title  and  right  to  a  portion  of  the  property, 
but  the  decree  contains  no  specific  directions  to  defendants 
to  surrender  possession  of  such  portion,  and  they  refuse  so 
to  do,  plaintiff  may  have  a  receiver  for  the  purpose  of  col- 
lecting and  preserving  the  rents,  and  to  insure  their  proper 
application  to  the  expenses  of  the  estate.  In  such  case,  the 
receiver  is  not  appointed  for  the  purpose  of  executing  the 
decree,  or  to  turn  defendants  out  of  possession,  but  only 
to  protect  the  rights  of  plaintiffs  in  the  property.  And  the 
fact  that  the  bill  did  not  pray  a  receiver  is  no  bar  to  the  re- 
lief in  such  case,  since  the  appointment  is  made  because  of 
circumstances  subsequent  to  the  decree.2  So  after  a  decree 
for  the  foreclosure  of  a  mortgage,  a  receiver  of  the  rents  of 
the  mortgaged  premises  was  allowed,  as  against  a  tenant  in 
possession  for  more  than  nineteen  years,  but  who  was  not 
a  party  to  the  suit,  the  exigency  of  the  case  requiring  the 
relief  to  prevent  the  tenant  from  setting  up  an  adverse  pos- 
session of  twenty  years.3  And  after  a  final  decree  confirm- 
ing a  sale  of  land  to  a  purchaser  at  a  judicial  sale  and 
awarding  a  writ  of  assistance,  the  purchaser  being  entitled 
to  the  rents  may  have  a  receiver  pending  an  appeal  by  de- 
fendant, it  appearing  that  defendant  is  insolvent,  and  that  if 
he  is  permitted  to  retain  possession,  the  rents  will  be  lost  to 
the  purchaser.4  So  when  real  estate  of  a  debtor  has  been 
decreed  to  be  sold  in  satisfaction  of  liens  and  demands  of 
his  creditors,  a  receiver  has  been  appointed  by  the  court 
below  upon  the  application  of  the  creditors,  to  receive  the 
rents  and  profits  pending  an  appeal  and  mjpersedeas  to  such 
decree,  the  defendant  being  insolvent,  and  the  lands  being 

'Bowman  v.  Bell,  14  Sim.,  892.  513.     As  to  the  effect  of  the  appeal 

2  Wright  v.  Vernon,  3  Drew.,  112.  upon  such  order  appointing  a  re- 

3  Thomas  v.  Davies,  11  Beav.,  29.  ceiver,    see    Payne    v.    Baxter,    2 
*  Merrill  v.  Elam,  2  Term.  Ch.,  Tenn.  Ch.,  517. 


CHAP.  IV.]  PRACTICE.  89 

insufficient  to  satisfy  the  liens  thereon.1  But  a  strong  case 
of  probable  injury  must  be  made  out,  to  warrant  the  court 
in  entertaining  the  application  at  this  stage  of  the  cause.- 
And  upon  a  bill  by  a  mortgagor  against  a  mortgagee  for  re- 
demption of  the  mortgaged  premises,  after  a  decree  direct- 
ing the  redemption,  the  court  will  not,  upon  the  ex  parte 
application  of  defendant,  entertain  a  motion  for  a  receiver, 
such  a  practice  being  without  precedent  or  authority.3 

i  Beard  v.  Arbuckle,  19  W.  Va.,        2  Adair  v.  Wright,  16  Iowa,  385. 
145.  3  Barlow  v.  Gains,  8  Beav.,  329. 


90  RECEIVERS.  [CHAP.  IV. 


III.  Notice  of  the  Application. 

§  111.     Courts  exceedingly  averse  to  interfering  without  notice. 

112.  The  rule  imperative,  not  discretionary ;  want  of  notice  ground 

for  reversal  on  error ;  how  taken  advantage  of. 

113.  What  must  be  shown  to  warrant  departure  from  the  rule. 

114.  Whether  service  of  process  necessary,  qucere. 

115.  Notice  required  in  case  of  insolvent  corporation. 

116.  Personal  service  of  notice  not  always  requisite ;  parties  in  court 

by  counsel. 

117.  Notice  dispensed  with  when    defendant  has  absconded;  non- 

resident defendants. 

§  111.  Courts  of  equity  are  exceedingly  averse  to  the  ex- 
ercise of  their  extraordinary  jurisdiction  by  the  appointment 
of  receivers  upon  ex  parte  applications,  and  this  practice  is 
never  tolerated  except  in  cases  of  the  gravest  emergency, 
demanding  the  immediate  interference  of  the  court  for  the 
prevention  of  irreparable  injury,  or  in  cases  where  defend- 
ant has  absconded  and  willfully  put  himself  beyond  the  ju- 
risdiction of  the  court.  And  it  may  be  stated  as  the  settled 
practice,  both  in  England  and  America,  to  require  the  mov- 
ing party  to  give  due  notice  of  the  application  to  defendant, 
over  whose  effects  he  seeks  the  appointment  of  a  receiver, 
in  order  that  he  may  have  an  opportunity  of  being  heard  in 
defense,  and  that  his  property  may  not  be  summarily  wrested 
from  him  upon  an  ex  parte  application.  Even  in  exceptional 
cases  of  great  emergency,  when  the  relief  is  demanded  for 
the  prevention  of  irremediable  injury,  the  courts  are  ex- 
tremely averse  to  interference  ex  parte,  and  will  ordinarily 
entertain  the  application  only  after  notice  to  defendant,  or 
a  rule  to  show  cause.1 

iVerplanck  v.  Mercantile  Insur-  How.  Pr.,  26;  Bisson  v.  Curry,  35 

ance  Co.,  2  Paige,  438;  Sandford  Iowa,  72,  following  French  v.  Gif- 

v.  Sinclair,  8  Paige,  373 ;  People  v.  ford,  30  Iowa,   148 ;  Blondheim  v. 

Albany  &  Susquehanna  R.  Co.,  7  Moore,    11    Md.,   365;   Triebert  v. 

Ab.  Pr.,  N.  S.,  265;  S.  C,  1  Lans.,  Burgess,  11  Md.,   452;  Whitehead 

308;  S.  C,  55  Barb.,  34;  S.    C,  38  v.  Wooten,  43  Miss.,  523;  Rogers  v. 

How.  Pr.,  228;  Field  v.  Ripley,  20  Dougherty,  20  Ga.,  271;  Nusbaum 


CHAP.  IV.]  PKACTICE.  91 

§  112.  The  rule  of  practice  thus  stated,  requiring  notice 
to  defendant  before  an  application  for  a  receiver  will  be 
entertained,  would  seem  to  be  not  a  matter  of  discretion 
with  the  court,  but  an  inflexible  rule  which  the  courts  are 
not  at  liberty  to  disregard.  And  it  is  held  to  be  error  for 
the  court  to  entertain  the  application,  and  to  appoint  a  re- 
ceiver without  notice  to  the  adverse  party.1  And  the  fact 
that  a  receiver  is  appointed  upon  the  same  day  with  the 
tiling  of  the  bill,  without  notice  to  defendant  of  the  appli- 
cation, is  deemed  sufficient  ground  for  reversing  the  action 
of  the  court.2  So  when  the  appointment  was  made  without 
notice  to  defendants,  who  were  merchants  residing  and 
doing  business  in  the  same  city,  and  within  a  short  distance 
from  the  court,  no  imperative  necessity  being  shown  for 
such  haste,  the  order  of  the  court  was  revoked.3  And  when 
plaintiff  had  procured  the  appointment  of  a  receiver  upon 
an  ex  parte  application,  late  at  night,  and  the  receiver  sold 
the  property  early  the  following  morning,  the  court  set 
aside  the  sale,  and  revoked  the  appointment  as  contrary  to 
equity,  and  in  conflict  with  the  due  and  ordinary  course  of 
procedure  in  courts  of  justice.4  And  the  judgment  of  a 
court  below,  revoking  the  appointment  of  a  receiver,  be- 
cause of  want  of  notice,  will  be  affirmed  by  a  court  of  error.5 
But  it  is  held  in  Maryland,  that  no  advantage  can  be  taken 
in  an  appellate  court  of  the  want  of  notice,  except  by  an 
appeal  from  the  order  appointing  the  receiver.6  Under  the 
New  York  chancery  practice,  however,  if  the  court  below 
had  improperly  allowed  an  ex  parte  application  for  a  receiver 

v.   Stein,  12  Md.,   315;  Caillard  v.  following    French    v.    Gilford,   30 

Caillard,  25  Beav.,  512;  Voshell  v.  Iowa,  148.     See,  also,  Railway  Co. 

Hynson,   26  Md.,   83;  Crowder  v.  v.  Jewett,  37  Ohio  St.,  649. 
Moone,  52  Ala.,  220 ;  Howe  v.  Jones,        2  Nusbaum  v.  Stein,  12  Md.,  315. 
57  Iowa,  130.     Under  the  statutes        3Triebert  v.  Burgess,  11  Md.,  452. 
of    Iowa,   a  receiver  may  be  ap-        4  Simmons    v.    Wood,    45  How. 

pointed  in  a  law  action,  before  no-  Pr. ,  268. 

tice  to  defendant.     Jones  v.  Graves,        5  Rogers  v.   Dougherty,   20   Ga., 

20  Iowa,  596.  271. 

'Bisson  v.   Curry,   35  Iowa,  72,        6  Voshell  v.  Hynson,  26  Md.,  83. 


92 


RECEIVERS. 


[CHAP.  IV. 


and  the  appointment  was  clearly  irregular,  defendant  could 
not  appeal  directly  from  that  order,  but  was  required  first 
to  apply  to  the  court  below  to  set  aside  or  modify  the  order, 
and  if  upon  a  proper  application  the  court  refused  so  to  do, 
an  appeal  would  then  lie  from  the  order  denying  the  appli- 
cation.1 But  upon  an  appeal  from  an  order  appointing  a 
receiver,  if  the  record  is  silent  as  to  whether  due  notice  of 
the  application  was  given  to  defendant,  it  will  be  presumed 
that  the  court  below  did  not  act  without  proof  of  notice.2 

§  113.  To  warrant  a  court  in  entertaining  an  application 
for  a  receiver  without  notice,  it  must  be  clearly  shown  that 
the  delay  which  would  result  from  giving  notice  would 
defeat  the  rights  of  plaintiff,  or  would  result  in  great  injury 
to  him.3  And  when  the  relief  is  sought  upon  an  ex  parte 
application,  upon  the  ground  of  extreme  necessity,  the  par- 
ticular facts  and  circumstances  rendering  such  summary 
proceeding  necessary  should  be  set  forth  in  the  application, 
and  a  mere  statement  of  opinion  as  to  such  necessity,  even 
though  made  under  oath,  will  not  justify  a  departure  from 
the  established  rule  requiring  notice  of  the  application.4 

§  114.     As  to  whether  defendant  must  be  actually  served 


i  Gibson  v.  Martin,  8  Paige,  481. 

2  Miller  v.  Shriner,  86  Ind.,  493. 

SMaynard  v.  Railey,  2  New, 
313. 

4Verplanck  v.  Mercantile  Insur- 
ance Co.,  2  Paige,  438.  Walworth, 
Chancellor,  says,  p.  450:  "By  the 
settled  practice  of  the  court  in  ordi- 
nary suits,  a  receiver  can  not  be 
appointed,  ex  parte,  before  the  de- 
fendant has  had  an  opportunity  to 
be  heard  in  relation  to  his  rights, 
except  in  those  cases  where  he  is 
out  of  the  jurisdiction  of  the  court, 
or  can  not  be  found ;  or  where,  for 
some  other  reason,  it  becomes  abso- 
lutely necessary  for  the  court  to 
interfere  before  there  is  time  to  give 
notice  to  the  opposite  party,  to  pre- 


vent the  destruction  or  loss  of  prop- 
erty. Formerly  it  was  never  done 
until  after  answer.  In  every  case 
where  the  court  is  asked  to  deprive 
the  defendant  of  possession  of  his 
property  without  a  hearing,  or  an 
opportunity  to  oppose  the  applica- 
tion, the  particular  facts  and  cir- 
cumstances which  render  such  a 
summary  proceeding  proper  should 
be  set  forth  in  the  bill  or  petition  on 
which  such  application  is  founded. 
Ogilvie's  affidavit  in  this  case,  that 
he  was  satisfied  of  the  necessity  of 
such  a  proceeding,  was  not  suffi- 
cient. He  should  have  stated  the 
facts  on  which  his  opinion  was 
founded,  to  enable  the  court  to 
judge  of  its  correctness." 


CHAP.  IV.]  PRACTICE. 


93 


with  process  in  the  cause,  in  addition  to  notice  of  the  motion 
for  a  receiver,  before  the  court  will  entertain  the  applica- 
tion, is  not  quite  clear  from  the  authorities.  It  would  seem, 
upon  principle,  that  under  the  prevailing  practice  of  hear- 
ing the  application  before  answer,  no  real  necessity  exists 
of  formal  service  of  process  in  the  cause  as  a  foundation  for 
the  motion,  if  defendant  has  due  notice  of  the  application. 
And  under  the  English  chancery  practice,  plaintiff  was  at 
liberty,  immediately  upon  filing  his  bill,  to  serve  defendant 
with  notice  of  the  motion  before  appearance.1  But  it  has 
been  held,  that  a  receiver  should  not  be  appointed  unless  the 
court  has  obtained  jurisdiction  by  service  of  process,  as  well 
as  notice  to  the  parties  in  interest  of  the  application.2  If, 
however,  a  receiver  is  prayed  for  as  a  part  of  the  final  relief 
sought  in  the  action,  the  process  which  brings  defendant 
into  court  to  answer,  is  sufficient  notice  of  the  final  relief 
prayed.  Upon  appeal,  therefore,  from  the  appointment  of 
a  receiver  in  such  case  as  part  of  the  final  decree,  it  will 
not  be  reversed  because  of  the  want  of  other  notice  of  the 
application.3 

§  115.  Even,  under  a  statute  authorizing  the  appointment 
of  receivers  over  insolvent  corporations,  the  appointment  will 
not  be  made  ex  parte  and  without  an  opportunity  to  the  de- 
fendant of  being  heard.  And  the  practice  of  the  New  York 
Court  of  Chancery  in  such  cases  was,  upon  the  filing  of  a 
petition  duly  verified,  setting  forth  the  grounds  on  which 
the  application  was  based,  to  issue  an  order  to  show  cause, 
a  copy  of  which  was  served  upon  the  proper  officers  of  the 
corporation,  directing  them,  at  a  future  day  therein  named, 
to  show  cause  why  the  application  should  not  be  granted.4 

1  Meaden  v.  Sealey,  6  Hare,  620.    service  of  process  and  also  by  no- 

2  Whitehead  v.  Wooten,  43  Miss.,  tice  of  motion."  And  see  Hyslop 
523.     "  It  can  not  well  be  seen,"    v.  Hoppock,  5  Benedict,  447. 

say  the  court,  Simrall,  J.,  p.  527,  "Newell    v.    Schnull,    73    Ind., 

"how  the  court  can  take  from  a  241. 

defendant  the  possession  of  prop-  4Deroe  V.  Ithaca  &  Owego  R. 

erty,  unless  it  has  jurisdiction  by  Co.,  5  Paige,  521. 


94 


KECEIVEKS. 


[CHAP.  IV. 


§  116.  It  is  not  in  all  cases  indispensable  that  the  notice 
should  be  personally  served  upon  each  defendant,  provided 
service  be  had  upon  one  of  the  defendants  authorized  to 
represent  the  others.  Thus,  it  is  held  sufficient  to  serve  the 
notice  upon  a  defendant  who  is  the  authorized  agent  of  his 
co-defendant,  and  who  is  acting  under  a  power  of  attorney 
from  him  in  the  management  of  the  very  property  over 
which  a  receiver  is  sought.1  And  the  application  may  be 
entertained  and  determined  without  any  previous  formal 
notice  to  the  parties  in  interest,  when  they  are  actually  rep- 
resented in  court  by  counsel  who  appear  in  resistance  to  the 
motion.2 

§  117.  "While  it  is  the  uniform  practice,  as  already  shown, 
to  entertain  applications  for  receivers  only  after  due  notice 
to  the  parties  against  whom  the  receiver  is  sought,  a  de- 
parture from  this  practice  is  allowed  when  a  defendant  has 
absconded  for  the  purpose  of  avoiding  service  of  process. 
And  in  such  cases  the  application  may  be  entertained  with- 
out notice,  service  of  process,  or  appearance  by  defendant ; 3 
especially  when  plaintiff  has  given  notice  of  the  application 
to  the  agents  and  tenants  of  defendant's  estate  over  which 
a  receiver  is  sought.4  So  notice  may  be  dispensed  with 
when  defendant  has  left  the  state  and  is  not  expected  to 
return  for  several  months,  and  no  person  is  authorized  to 
represent  him,  and  it  is  necessary  to  appoint  a  receiver 
without  delay  to  collect  rents  which  would  otherwise  be  lost. 
In  such  case,  the  order  of  appointment  should  reserve  to 
defendant  the  right  to  apply  for  relief  against  the  order 
upon  cause  shown.5  And  where  real  estate  had  been  con- 
veyed by  a  debtor  in  trust  for  the  payment  of  his  debts, 
and  the  trustee  had  been  in  possession  a  number  of  years 


!Mays  v.  Rose,  Freem.  (Miss.), 
703.  And  see  Maguire  v.  Allen,  1 
Ball&B.,  75. 

2  McLean  v.  Lafayette  Bank,  3 
McLean,  503. 

'Maguire  v.  Allen,  1  Ball  &  B., 


75;  Dowling  v.  Hudson,  14  Beav., 
423.  See  Gibbins  v.  Mainwaring, 
9  Sim.,  77;  "Williams  v.  Jenkins,  11 
Ga.,  595. 

*  Maguire  v.  Allen,  1  Ball  &  B.,  75. 

5  People  v.  Norton,  1  Paige,  17. 


CHAP.  IV.]  PEACTICE.  95 

without  paying,  a  creditor  was  allowed  a  receiver  until 
answer,  the  trustee  residing  beyond  the  jurisdiction  of  the 
court  and  not  having  appeared  in  the  action.1  And  under 
a  statute  authorizing  the  appointment  upon  such  notice  to 
the  adverse  party  as  the  court  may  prescribe,  when  such 
adverse  party  is  beyond  the  jurisdiction  of  the  court  in 
another  state,  it  is  not  error  to  make  the  order  without 
notice,  when  necessary  for  the  prevention  of  serious  loss.2 
So  under  the  code  of  procedure  of  New  York,  it  is  held 
that  a  receiver  may  be  appointed  over  a  partnership  in  an 
action  for  a  dissolution,  upon  the  appearance  of  the  resident 
partners  without  notice  to  a  non-resident  partner.3  But 
when  it  does  not  appear  that  defendant  has  left  the  country 
to  avoid  service  of  process,  and  no  particular  circumstances 
of  hardship  are  shown,  an  ex  parte  application  for  a  re- 
ceiver will  not  be  entertained.4 

1  Malcolm  v.  Montgomery,  2  Mol.,        3  Alford  v.  Berkele,  29  Hun,  633. 
500.  4  Stratton  v.  Davidson,  1  Ruas.  & 

2  Maish  v.  Bird,  59  la.,  307.  M.,  484. 


CHAPTER  V. 

OF  THE  RECEIVER'S  BOND  AND  LIABILITY  THEREON. 

I.  Of  the  Bond,       §  118 

II.  Liability  of  Sureties, 127 

I.  Of  the  Bond. 

§  118.     Bond  or  recognizance  required;  English  practice;  when  bond 
dispensed  with. 

119.  Receiver's  own  recognizance  sometimes  sufficient;  appointment 

by  consent. 

120.  New  York  doctrine ;  security  dispensed  with. 

121.  Title  does  not  vest  till  bond  is  executed ;  failure  ground  for  non- 

suit; may  be  filed  nunc  pro  tunc. 

122.  Appointment  on  final  decree ;  effect  of  omitting  bond. 

123.  Additional  security  required  on  extending  receiver. 

124.  Effect  of  bond  by  defendant  to  account  as  receiver. 

125.  Assignment  of  mortgage  as  security  for  receivership. 

126.  When  bond  to  be  approved  by  the  court. 
126  a.  Statute  of  limitations. 

§  118.  Eeceivers  are  usually  required,  before  entering 
upon  their  duties,  to  enter  into  a  bond  or  recognizance  for 
the  faithful  performance  of  their  duties,  with  adequate 
security,  the  amount  and  conditions  of  the  security  being 
usually  determined  by  the  court  making  the  appointment, 
due  regard  being  had  to  the  value  of  the  property  or  fund 
entrusted  to  the  receiver's  management.  Under  the  prac- 
tice of  the  English  Court  of  Chancery,  established  at  an 
early  period,  a  receiver  was  required  to  enter  into  a  recog- 
nizance with  two  sureties,1  and  it  was  customary  to  require 
him  to  give  security  in  all  cases  when  the  order  was  made 
in  the  usual  way  by  the  court,  and  a  reference  had  to  a 
master  to  appoint ;  and  it  was  held  that  the  security  could 

i  Mead  v.  Orrery,  3  Atk.,  235. 


CnAP.  V.]  BOND   AND    LIABILITY.  97 

not  be  dispensed  with  in  such  cases,  even  by  consert  of  the 
parties  to  the  action.1  If,  however,  the  parties  themselves 
agreed  upon  a  receiver  to  be  appointed,  not  by  authority  of 
court,  but  by  their  own  consent,  and  then  asked  that  he 
should  act  without  giving  the  usual  security,  it  was  re- 
garded as  proper  to  permit  this  to  be  done.2  And  when  a 
receiver  was  appointed  without  salary,  it  was  said  to  be  not 
unusual  to  dispense  with  the  security  otherwise  required.3 
And  a  mortgagee  of  West  Indian  estates  was  in  one  case 
appointed  receiver  in  England,  without  being  required  to 
give  the  usual  security.4 

§  119.  It  was  held  in  an  early  English  case,  that  per- 
sons named  as  receivers  by  parties  to  the  cause,  might  be 
appointed  upon  their  own  recognizances  only.5  And  when  a 
receiver  was  satisfactory  to  all  parties  except  the  defendant, 
and  had  been  in  the  previous  possession  and  management  of 
the  estate  in  controversy,  it  was  provided  by  the  terms  of 
the  decree  that  he  should  be  allowed  to  give  security  by  his 
individual  recognizance.6  But  in  the  Irish  Court  of  Chan- 
cery, it  is  held  that  a  receiver  will  not  be  appointed  without 
giving  adequate  security,  even  though  the  parties  in  interest 
consent  that  he  may  be  appointed  merely  upon  his  own 
recognizance.7 

§  120.  In  New  York,  the  obligation  of  a  receiver  to  give 
adequate  security  for  the  faithful  performance  of  his  trust, 
is  regarded  as  being  founded  upon  the  general  practice  of 
courts  of  equity,  and  it  is  held  to  be  within  the  power  of 
the  court  to  dispense  with  security  in  cases  where  it  is 
plainly  unnecessary.  For  example,  where,  in  proceedings 
by  judgment  creditors  against  their  debtor,  the  same  per- 
son is  appointed  receiver  in  different  actions  brought  by 

i  Manners  v.  Furze,  11  Beav.,  30.        4  Davis  v.  Barrett,  13  L.  J.,  N.  S. 

See,  also,  Tylee  v.  Tylee,  17  Beav.,  Ch.,  304. 
083.  sRidout  v.    Earl    of    Plymouth, 

2 Manners    v.   Furze,    11    Beav.,  Dick.,  G8. 
30.  e  Carlisle  v.  Berkley,  Amb.,  599. 

a  Gardner  v.  Blane,  1  Hare,  381.  "  Bailie  v.  Bailie,  1  Ir.  Eq.,  413. 

7 


98 


RECEIVERS. 


[chap. 


different  creditors,  it  is  held  that  he  need  not  give  new 
security  in  each  successive  action,  if  he  has  already  given 
ample  security.1 

§  121.  The  receiver's  title  and  authority  as  well  as  his 
right  of  possession  are  dependent  on  and  accrue  only  upon 
his  giving  the  requisite  bond  or  security  as  fixed  by  the 
order  of  his  appointment.2  And  a  failure  to  execute  the 
bond  in  due  form,  as  required  by  the  order,  is  ground  for  a 
nonsuit  in  an  action  brought  by  the  receiver  in  his  official 
capacity,3  although  a  mere  informality  in  the  bond,  as  the 
fact  that  it  was  not  executed  under  seal,  can  not  be  taken 
advantage  of  in  an  action  brought  by  the  receiver  against 
third  parties.4  So  when  creditors  of  the  defendant  levy  upon 
the  property  which  is  the  subject-matter  of  the  receivership, 
between  the  date  of  the  appointment  and  the  time  of  giving 
the  required  security,  such  levy  constitutes  no  disturbance 
of  the  receiver's  possession.5  If,  however,  between  the  date 
of  the  appointment  and  the  time  of  giving  the  required  bond 
or  recognizance,  a  solicitor  in  the  cause  receives  money  due 
as  rents  or  proceeds  of  the  sale  of  property  which  is  the  sub- 
ject-matter of  the  receivership,  he  may  be  compelled,  after 
the  bond  or  recognizance  is  perfected,  to  pay  such  money  to 
the  receiver.6  And  when  a  receiver  executes  his  bond  in 
due  form,  with  sufficient  sureties,  and  the  bond  is  approved 
by  the  parties,  but  through  inadvertence  is  not  filed  with 
the  court,  and  the  receiver  takes  possession  of  the  assets 
committed  to  his  charge,  it  is  proper  for  the  court  to  direct 
the  bond  to  be  filed  nunc  pro  tunc,  so  as  to  complete  the  re- 


i  Banks  v.  Potter,  21  How.  Pr., 
469. 

2  Johnson  v.  Martin,  1  Thomp.  & 
C.  (N.  Y.  Supreme  Court),  504;  De- 
fries  v.  Creed,  34  L.  J.,  N.  S.  Eq., 
607;  Edwards  V.  Edwards,  2  Ch. 
D.,  291,  reversing  S.  C,  1  Ch.  D., 
454.  But  see  Ex  parte  Evans,  13 
Ch.  D.,  252. 

3  Johnson  v.  Martin,  1  Thomp.  & 
C.  (N.  Y.  Supreme  Court),  504. 
And  see  as  to  receiver's  failure  to 


give  security  as  ground  for  revers- 
ing decree,  Tomlinson  v.  Ward,  2 
Conn.,  396. 

4  Morgan  v.  Potter,  17  Hun,  403. 

SDefries  v.  Creed,  34  L.  J.,  N.  S. 
Eq.,  607;  Edwards  v.  Edwards,  2 
Ch.  D.,  291,  reversing  S.  C,  1  Ch. 
D. ,  454.  But  see  Ex  parte  Evans, 
13  Ch.  D.,  252. 

6  Wickens  v.  Townshend,  1  Euss. 
&  M.,  361;  In  re  Birt,  22  Ch.  D., 
604. 


CHAP.  V.]  EOND   AND   LIABILITY.  99 

ceiver's  appointment  and  render  him  liable  to  account  as  an 
officer  of  the  court,  for  the  property  which  came  to  his 
hands  subsequent  to  the  time  when  the  bond  should  have 
been  filed.  And  this  may  be  done,  notwithstanding  the 
parties  to  the  litigation  have,  after  the  receiver's  appoint- 
ment, submitted  the  matter  in  dispute  to  referees  for  settle- 
ment, and  have  consented  to  a  decree  dividing  the  property 
equally  between  them ;  since  such  submission  to  arbitration 
does  not  alter  or  affect  the  liability  of  the  receiver  to  ac- 
count for  the  property  entrusted  to  him.1  So  where  on  his 
appointment,  a  receiver  had  entered  into  a  recognizance  with 
two  sureties,  and  one  of  them  afterwards  caused  himself  to 
be  discharged,  and  the  receiver  entered  into  a  new  recog- 
nizance, but  the  time  for  enrolling  it  had  elapsed,  it  was 
ordered  to  be  entered  nunc  pro  tunc.2 

§  122.  When  a  receiver  is  appointed  as  a  part  of  the  final 
judgment  or  decree  in  the  cause,  and  for  the  purpose  of  car- 
rying out  and  executing  that  decree,  the  fact  that  the  court 
has  failed  to  require  any  bond  of  the  receiver  constitutes  no 
ground  for  reversing  the  decree  on  error,  since  the  omission 
will  be  regarded  as  the  fault  of  the  defendant  in  not  insist- 
ing upon  a  bond.3 

§  123.  Under  the  Irish  chancery  practice,  it  is  custom- 
ary, when  a  receiver  has  been  appointed  over  real  property, 
and  subsequent  applications  are  made  for  a  receiver  over 
the  same  estate,  to  extend  the  appointment  of  the  former 
receiver  to  such  applications.  And  on  being  so  extended, 
he  is  required  to  give  additional  security,  or,  in  default 
thereof,  he  will  be  removed  and  another  appointment  made.4 

§  124.  Where,  upon  a  bill  in  equity  to  enforce  an  interest 
in  a  trust  fund  and  for  a  receiver  pendente  lite,  the  court 
refuses  to  appoint  a  receiver,  upon  condition  of  defendant 
executing  a  bond  to  account  as  receiver  for  all  goods  and 
money  which  had  come  into  his  possession,  and  to  pay  them 
over  pursuant  to  the  decree  of  the  court,  such  a  bond  will 

i  Whiteside  v.  Prendergast,  2  sShulte  v.  Hoffman,  18  Tex., 
Barb.  Ch.,  471.  678. 

*  Vaughant?.  Vaughan,  Dick.,  90.        *  Wise  v.  Ashe,  1  Ir.  Eq.,  210. 


100  KEOEIY^KS.  [CHAP.  V. 

be  deemed  good  as  a  common-law  obligation.  And  the  ob- 
ligor, although  not  considered  as  a  receiver  or  officer  of 
the  court,  stands  in  the  light  of  one  who,  for  a  personal 
accommodation,  has  assumed  a  legal  responsibility,  and  after 
receiving  the  benefits  of  the  obligation  he  is  estopped  from 
denying  its  legality.1 

§  125.  Where  one  of  three  executors  of  an  estate  was 
appointed  receiver  in  another  matter,  and  he,  with  the  other 
executors,  united  in  assigning  a  mortgage  of  their  testator, 
held  by  them  as  executors,  as  security  for  such  receivership, 
although  such  course  was  regarded  as  exceedingly  repre- 
hensible, it  was  held  that  the  assignment  was  good  and 
could  not  be  questioned,  and  that  it  must  stand  as  security 
for  whatever  amount  might  be  due  from  the  receiver.2 

§  126.  It  is  customary  in  the  order  of  appointment  to 
provide  that  the  sureties  upon  the  bond  shall  be  approved 
by  the  court,  although  it  is  sometimes  provided  that  they 
may  be  approved  by  the  clerk.  But  when  the  law  under 
which  a  receiver  is  appointed,  authorizes  his  appointment 
and  the  approval  of  his  bond  by  the  court,  both  acts  being 
required  to  be  performed  by  the  court  itself,  it  is  not  proper 
that  the  bond  should  be  approved  by  the  clerk  of  the  court.3 
But  it  is  not  necessary  that  the  sureties  should  be  citizens 
of  the  state  in  which  the  action  is  pending,  and  the  court 
may  accept  non-resident  sureties.4 

§  126  a.  It  is  held  in  England,  that  money  due  from  a  re- 
ceiver, and  not  accounted  for  in  the  settlement  of  his 
accounts,  is  to  be  treated  as  a  debt  of  record,  as  regards  the 
application  of  the  statute  of  limitations  in  an  action  for  the 
recovery  of  such  money.  And  it  would  seem  that,  as  to 
money  due  from  the  receiver  and  not  accounted  for,  he  oc- 
cupies the  relation  of  a  trustee  to  the  parties  in  interest,  and 
that  such  indebtedness  is  not  barred  by  the  statute  of  lim- 
itations.5 

1  Baker  v.  Bartol,  7  Cal.,  551.  i  Taylor   v.  Life   Association  of 

-  Mead  v.  Orrery,  3  Atk.,  235.  America,  3  Fed;  Rep.,  465. 

3 Newman  v.  Hammond,  46  Ind,,  5  Seagram  v.   Tuck,   18  Ch.   P., 

119.  296. 


CHAP.  V.]  BOND   AND    LIABILITY.  101 


II.  Liability  of  Sureties. 

§  127.  Sureties  held  to  strict  liability ;  how  discharged. 

128.  On  death  of  one  surety  receiver  must  procure  another. 

129.  When  liability  becomes  absolute ;  right  of  action ;  practice. 

130.  Suit  against  sureties  on  death  of  receiver. 

130  a.  How  far  sureties  concluded  by  order  on  receiver. 

131.  Liability  for  interest;  costs  of  attachment;  surety  protected  by 

injunction. 

132.  Effect  of  payment  by  surety  to  solicitor. 

133.  Surety  may  be  reimbursed  out  of  balance  in  receiver's  hands; 

ordered  to  refund ;  remedy  in  equity. 
133a.  Sureties  of  clerk  of  court  appointed  receiver;  liability  to  cred- 
itors not  named  in  bond. 

§  127.  The  sureties  of  a  receiver  are  usually  held  very 
strictly  to  the  obligation  of  their  recognizance  or  bond,  and 
will  not  be  discharged  therefrom  upon  their  own  applica- 
tion, unless  such  course  appears  to  be  for  the  benefit  of  the 
parties  to  the  cause,1  or  unless  fraud  is  shown,  and  it  is  made 
to  appear  that  the  person  secured  by  the  recognizance  is 
connected  with  such  fraud ;  and  if  these  facts  are  not  shown, 
a  bill  to  have  a  recognizance  vacated  will  be  dismissed.2 
But  it  is  competent  for  the  parties  in  interest  in  a  cause  to 
consent  that  the  receiver's  recognizance  or  bond  be  vacated 
as  to  one  surety,  and  that  he  be  discharged,  without  releas- 
ing the  remaining  surety  from  his  liability.  "When  it  is 
desired  to  pursue  this  course,  the  continuing  surety  and  the 
receiver  should  enter  into  a  written  consent  or  agreement, 
providing  that  the  recognizance  shall  continue  to  be  bind- 
ing upon  them,  notwithstanding  it  has  been  vacated  as  to 
the  retiring  surety.  This  agreement  should  be  verified  by 
affidavit,  and  should  state  that  the  parties  consent  to  the 
vacating  of  the  recognizance  as  to  the  one  surety,  with- 
out prejudice  to  the  liability  of  the  receiver  and  of  the 
other  surety,  as  well  for  acts  before   as  for   those  after- 

» Griffith  v.  Griffith,  2  Ves.,  400.        2  Hamilton  v.  Brewster,  2  Mol., 

407. 


102  RECEIVERS.  [CHAP.  V. 

ward  done,  and  that  they  will  not  rely  on  such  discharge 
in  defense  of  any  future  proceedings  which  may  be  brought 
against  them.1  Where  the  premises  subject  to  a  receiver- 
ship have  been  sold  under  the  final  decree  in  the  cause,  and 
the  purchaser  has  been  put  in  possession,  this  has  been  held 
equivalent  to  a  discharge  of  the  receiver,  and  sufficient 
ground  for  vacating  his  recognizance.2 

§  128.  Where  one  of  the  sureties  upon  the  recognizance 
of  a  receiver  dies,  without  leaving  any  property  which  can 
be  made  available  for  the  purpose  of  satisfying  the  recogni- 
zance, the  court  will  require  the  receiver  to  procure  a  new 
surety.3 

§  129.  When  the  bond  or  recognizance  given  by  a  re- 
ceiver is  conditioned  to  be  void  if  he  shall  duly  perform  his 
duties  as  receiver  and  account  to  the  court,  the  obligation  be- 
comes absolute  upon  his  failure  so  to  do.4  It  is  held,  however, 
that  the  receiver  and  his  sureties  are  not  liable  to  an  action 
upon  the  bond  until  he  has  failed  to  obey  some  order  of  the 
court  touching  the  effects  placed  in  his  hands.  And  the 
proper  practice  would  seem  to  be,  to  first  apply  to  the  court 
for  a  rule  upon  the  receiver  to  render  his  account.  After 
the  account  is  adjusted  and  approved  by  the  court,  and  the 
receiver  is  ordered  to  pay  the  effects  in  his  hands  into  court, 
or  to  the  person  entitled  thereto,  a  failure  to  comply  with 
such  order  renders  himself  and  his  sureties  liable.  The  re- 
ceiver and  his  sureties  can  not  therefore  be  sued  upon  the 
bond  until  the  court  has  adjudicated  the  question,  and  made 
some  order  touching  the  rights  of  the  parties  to  the  property 
in  his  hands.5 

§  130.  Where,  upon  the  death  of  a  receiver,  there  is  a 
balance  due  from  him  to  the  estate,  the  amount  of  which  is 

iCallaghan  v.    Callaghan,  8   Ir.  ^Maunsell  v.  Egan,  3  Jo.  &  Lat., 

Eq.,  572;  O'Keeffe  v.  Armstrong,  2  251. 

Ir.  Ch.,N.  S.,  115.  5 State  v.  Gibson,  21  Ark.,  140; 

2  Anonymous,  2  Ir.  Eq.,  416.  Bank  of  Washington  v.  Creditors, 

3Ayerall  v.  Wade,  Flan.  &  K.,  86  N.  C,  323;  Atkinson  v.  Smith, 

341.  89  N.  C,  72. 


BOND   AND    LIABILITY. 


103 


CHAP.  V.] 

not  definitely  ascertained,  the  court,  on  petition  of  parties 
in  interest,  will  grant  leave  to  put  the  recognizance  in  suit 
against  the  sureties.  The  receiver  in  such  case  not  having 
paid  the  balance  into  court,  there  is  a  forfeiture  of  the  re- 
cognizance, constituting  a  debt  due  from  the  receiver,  and 
there  being  no  means  of  pursuing  the  ordinary  remedy 
against  him,  resort  may  be  had  to  the  surety.1 


1  Ludgater  v.  Channell,  3  Mac.  & 
G.,    175,   reversing  S.  C,  15  Sim., 
479.    The  petition  in  this  case  al- 
leged that  the  receiver  had  died, 
leaving  a  balance  due  from  him  to 
the  estate,  and  prayed  that  the  re- 
cognizance which  he  had  entered 
into  might  be  put  in  suit  against 
Ins  real    and   personal  representa- 
tives and  his  sureties,  or  that  his 
personal  representative  might  forth- 
with pass  the  accounts  of  his  re- 
ceipts and  payments  in  respect  to 
the  estate.     On  appeal  from  the  de- 
cision of  the  Vice-Chancellor,  dis- 
missing  the   petition,    leave    was 
granted  to  bring  suit  against  the 
sureties.     Lord  Truro  observes,  p. 
179,  as  follows :  "  It  is  of  the  utmost 
importance  that  the  functions  of  re- 
ceivers, who  are  the  officers  of  this 
court,  should  be  duly  discharged. 
The  respondents  in  the  present  case 
are  the  sureties,  and  the  represent- 
atives of  the  receiver ;  and  the  re- 
cognizance in  question  was  entered 
into  in  pursuance  of  a  general  order 
of  the  court.     Now  the  obligation 
of  a  receiver  is  to  account  once  a 
year,  and  to  pay  his  balances  into 
court ;  but  here  this  duty  was  en- 
tirely omitted,  thus  involving  a  for- 
feiture of   the  recognizance,   and 
consequently  constituting    a    debt 
due    by  the    receiver.     Upon    the 
death  of  the  receiver,  the  parties 
interested  in  the  fund  come  to  the 


court  and  state  that  redress  may  be 
had    in    one  of    two  ways,  either 
against  the  representatives  of  the 
receiver,   or   against  his    sureties. 
They  present  their  claim  in  a  double 
aspect,   and  call  on  the  court  to 
grant  them  relief  as  against  one  or 
other  of  the  respondents  to  the  pe- 
tition;   and    it    is  obvious  that  if 
either  of  the  respondents  had  been 
omitted,  the  other  would  have  ob- 
jected, and  with  some  reason,  to 
his  absence.     But  the  administra- 
trix says  she  is  not  accountable  in 
this  form  of  proceeding;   and  the 
sureties,  on  their  part,  allege  that 
there  is  a  positive  rule  of  practice 
that  the  surety  can  not  be  made  to 
account  until  the  receiver  has  been 
called  upon,  and  further,  that  the 
mode  of  proceeding  in  such  a  case 
is  by  bill  against  the  personal  repre- 
sentative.    I  can,  however,  find  no 
authority  for  the  rule  which  it  is 
thus  sought  to  establish.     .     .     The 
books  of  practice  show  that  where 
there  are  not  the  means  of  pursuing 
the  ordinary  course  against  the  re- 
ceiver, the  surety  may  be  had  re- 
course to ;  and  the  first  part  of  the 
prayer  of  the  petition  is  for  leave  to 
sue  the  sureties.    Not  therefore  now 
deciding  whether  the  surety  shall 
pay,  or  whether  the  administratrix 
may  or  may  not  be  called  on  to  ac- 
count in  this  form  of  proceeding,  I 
think  that  the    first    part  of    the 


104:  RECEIVERS.  [CHAP.  V. 

§  130  a.  In  an  action  against  the  sureties  upon  the  bond 
of  a  receiver  of  an  insolvent  corporation,  an  order  made  in 
the  cause  in  which  the  receiver  was  appointed,  fixing  the 
amount  due  from  him  and  directing  its  payment,  is  compe- 
tent evidence  against  the  sureties,  both  as  to  the  breach  of 
the  bond  and  as  to  the  amount  due.  And  in  such  an  action, 
the  omission  of  the  receiver  to  pay  to  himself  as  receiver 
money  which  he  had  borrowed  from  the  corporation  before 
his  appointment  is  a  breach  of  the  condition  of  his  bond,  for 
which  the  sureties  are  liable.  Nor  in  such  case  can  the 
liability  of  the  sureties  be  reduced  by  the  fact  that  the  re- 
ceiver has  rendered  valuable  services  as  such,  his  compensa- 
tion for  which  has  not  yet  been  determined  or  paid.1  But 
when  the  undertaking  of  the  surety  is  that  the  receiver 
will  thenceforth  faithfully  discharge  his  duties,  the  surety 
will  not  be  liable  for  any  default  or  misconduct  of  the  re- 
ceiver prior  to  the  execution  of  the  bond.  And  in  such  case 
the  surety,  in  an  action  upon  his  bond,  is  not  concluded  by 
an  accounting  as  to  the  amount  due  from  the  receiver,  and  by 
an  order  fixing  the  amount,  made  in  the  cause  in  which  the 
receiver  was  appointed,  when  the  surety  wTas  not  a  party  to 
such  accounting,  and  was  not  heard  thereon.2  But  if  the 
receiver  does  in  fact  receive  and  collect  certain  notes,  which 
he  is  not  authorized  to  receive  in  payment  for  the  hiring  of 
property  which  he  is  authorized  to  hire,  his  sureties  are 
liable  in  an  action  upon  the  bond  for  his  failure  to  account 
for  the  proceeds.3 

§  131.  As  a  general  rule,  the  sureties  of  receivers  will  be 
held  responsible,  not  only  for  all  sums  of  principal  for 
which  the  receiver  is  in  default,  but  also  for  interest  due 

prayer    of    the    petition    must    be  3Weemst\  Lathrop,  42  Tex.,  207. 

granted,  and  it  is  unnecessary  for  And  see  this  case  as  to  the  right  of 

me  to  advert  further  to  the  alterna-  a    receiver,    appointed    upon    the 

tive  relief  sought."  death    of    a    former    receiver,    to 

1  Commonwealth  v.  Gould,  118  maintain  an  action  against  the 
Mass.,  300.  sureties  upon  the  bond  of  such  for- 

2  Thomson  v.  MacGregor,  81  N.  mer  receiver. 
Y.,  592. 


CHAP.  V.]  BOND   AND   LIABILITY.  105 

thereon,  and  for  which  the  receiver  is  liable.1  This  liability 
of  the  surety  for  interest  is,  however,  regarded  as  somewhat 
discretionary  with  the  court.2  And  where  the  receiver  had 
been  bankrupt  with  full  knowledge  of  all  parties  for  a  con- 
siderable length  of  time,  and  no  steps  had  been  taken  to 
compel  the  passing  of  his  accounts,  the  sureties  were  re- 
lieved from  paying  interest.3  But  the  sureties  of  a  default- 
ing receiver  will  be  held  liable  to  the  extent  of  the  sum 
secured  by  the  recognizance,  for  the  costs  of  an  attachment 
against  him  for  not  accounting,  as  well  as  the  costs  of  an 
application  for  his  removal,  and  for  the  appointment  of  his 
successor.4  When  the  surety  has  paid  in  full  the  entire 
balance  due  from  the  receiver,  he  may  be  protected  by  in- 
junction from  the  enforcement  of  judgment  upon  his  recog- 
nizance for  anything  more.5 

§  132.  Where  proceedings  at  law  were  instituted  against 
the  surety  to  enforce  payment  of  money  due  from  the  re- 
ceiver, who  had  been  discharged  under  the  insolvent  debtor's 
act,  it  was  held  that  payment  of  the  money  by  the  surety 
to  the  solicitor  prosecuting  the  proceedings  was  not  a  suffi- 
cient payment,  and  the  court  refused  to  discharge  the  pro- 
ceedings against  the  surety  until  plaintiff  had  been  served 
with  notice  of  the  application.  But  notice  having  been 
served,  and  the  plaintiff  not  appearing  or  resisting,  the  pro- 
ceedings against  the  surety  were  discharged.6 

§  133.  A  surety  upon  a  receiver's  bond  is  in  a  certain 
sense  regarded  as  an  officer  of  the  court,  to  the  extent  that 
he  is  entitled  to  be  reimbursed  what  he  has  been  compelled 
to  pay  for  the  receiver,  out  of  the  balance  in  the  latter's 
hands.  The  court  will  not,  therefore,  permit  the  receiver 
to  withdraw  a  balance  due  him  until  the  surety  is  reim- 


1  Dawson  v.  Raynes,  2  Russ.,  466.  affirmed  on  appeal,  9  Ir.  Eq.,  2S3; 

2 In  re  Herrick's  Minors,  3  Ir.  Ch.,  S.  C,  3  Jo.  &  Lat.,  251. 

N.  S.  ,183.  5  In  re  Herrick's  Minors,  3  Ir.  Ch. , 

» Dawson  v.  Raynes,  2  Russ.,  466.  N.  S.,  183. 

<Maunsell  v.  Egan,  8  Ir.  Eq.,  372.  6Mann  v.  Stennett,  8  Beav.,  189. 


106 


KECEIVEKS. 


[CHAP.  V. 


bursed,  and  only  the  balance  will  be  paid  to  the  receiver.1 
And  when  the  surety,  to  indemnify  himself  for  his  liability, 
receives  a  portion  of  the  funds  collected  by  the  receiver, 
knowing  them  to  be  a  part  of  the  trust  funds  in  the 
hands  of  the  latter,  the  court  has  sufficient  jurisdiction  over 
the  surety  by  reason  of  his  suretyship  and  of  his  intermed- 
dling with  the  funds,  to  act  by  an  order  in  personam  in  the 
cause  in  which  the  receiver  was  appointed,  directing  the 
surety  to  pay  such  money  into  court.2  And  in  Mississippi, 
it  is  held  to  be  an  appropriate  exercise  of  legislative  author- 
ity to  confer  upon  a  court  of  equity  jurisdiction  over  the 
bond  of  a  receiver  and  over  the  sureties,  such  jurisdiction 
being  regarded  as  ancillary  to  its  jurisdiction  over  the  sub- 
ject-matter in  controversy.  A  statute,  therefore,  author- 
izing a  court  of  equity  to  give  a  remedy  by  scire  facias 
against  the  sureties  is  held  to  be  valid  and  constitutional.3 

§  133  a.  When  the  court  has  appointed  its  own  clerk  as 
receiver  in  a  cause,  in  the  absence  of  any  statute  in  force  at 
the  date  of  the  bond  fixing  the  liability  of  his  sureties  in 

upon  principle,  as  it  is  clearly  capa- 
ble of  being  maintained  upon  equi- 
table grounds.  The  court,  there- 
fore, can  not  part  with  the  fund, 
until  an  opportunity  is  given  of  de- 
termining the  claim  of  the  surety ; 
the  amount  of  which,  when  ascer- 
tained, must  be  paid  to  him;  and 
the  residue  only  must  be  paid  to 
the  receiver." 

2Seidenbach  v.  Denklespeil,  11 
Lea,  297. 

3  Bank  v.  Duncan,  52  Miss,,  740. 
As  to  the  right  of  a  surety  upon  a 
receiver's  bond  to  appeal  from  an 
order  for  the  payment  of  the 
amount .  of  the  bond,  made  in  the 
cause  in  which  the  receiver  was 
appointed,  see  In  re  Guardian  Sav- 
ings Institution,  78  N.  Y.,  408. 


1  Glossup  v.  Harrison,  3  Ves.  & 
Bea.,  134.  This  was  a  motion  by 
the  surety  of  a  receiver  who  had 
been  discharged  by  order  of  the 
court,  to  restrain  him  from  taking 
out  of  court  the  balance  due  him 
until  he  should  satisfy  payments 
made  by  the  surety  on  his  account. 
Lord  Eldon  observed,  p.  135: 
"Where  the  surety  for  a  receiver 
in  this  court  is  called  upon  to  pay, 
as  the  receiver  is  an  officer  of  the 
court,  and  the  surety  is  so  in  a 
sense,  if  there  is  anything  due  in 
account  between  them,  justice  re- 
quires that  upon  the  application  of 
the  surety  he  shall  be  indemnified 
for  what  he  has  paid  for  the  re- 
ceiver out  of  the  balance  due  him. 
If  that  has  not  been  decided,  as  I 
think  it  has,  it  must  be  decided 


CHAP.  V.]  BOND   AND    LIABILITY.  107 

such  case,  the  sureties  upon  the  official  bond  of  the  clerk- 
are  not  liable  for  his  default  as  receiver,  since  they  are  pre- 
sumed to  have  contracted  with  reference  only  to  his  lia- 
bility as  clerk.1  But,  although  the  bond  is  conditioned 
for  the  payment  of  certain  creditors  named,  and  the  cred- 
itors have  been  fully  paid,  yet  if  it  is  further  conditioned 
that  the  receiver  will  well  and  truly  account  for  all  mone}Ts 
received  by  him,  and  will  pay  over  all  such  moneys  and 
comply  with  all  orders  of  the  court  concerning  the  same, 
a  breach  of  such  condition  will  warrant  a  recovery  against 
the  sureties  in  behalf  of  creditors  who  are  not  expressly 
named  in  the  bond.2 

JKerr  v.  Brandon,  84  N.  C,  128;  clerk's  liability  in  such  cases,  and 

Rogers  v.   Odom,   86  N.   C,   432;  as  to  the  liability  of  sureties  upon 

Syme  v.  Bunting,  91  N.  C,  48.  But  his  official  bond  given   after  the 

see  Syme  v.   Bunting   as   to   the  passage  of  the  statute, 

effect  of  a  statute  enlarging  the  2  Ross  v.  Williams,  11  Heisk.,  410. 


CHAPTEE  YL 

OF  THE  RECEIVER'S  POSSESSION. 

I.  Nature  of  Receiver's  Possession, §  134 

[I.  Interference  with  Receivers  Possession, 163 


I.  Nature  of  Receiver's  Possession. 

184.    Receiver's  possession  is  possession  of  the  court. 

135.  When  and  to  what  extent  regarded  as  possession  of  either  party. 

136.  Title  and  right  to  possession  vest  back  to  time  of  appointment ; 

effect  of  appeal. 

137.  The  doctrine  in  Maryland. 

138.  Receiver  acquires  possession  subject  to  existing  hens. 

139.  Person  asserting  claim  to  property  must  apply  to  court. 

140.  Receiver's  possession  protected  by  injunction;  illustrations. 

141.  Property  not  allowed  to  be  sold  under  execution ;  not  subject  to 

process  of  another  court. 

142.  Receiver  can  only  pay  money  by  order  of  court. 

143.  Interference  with  receiver's  possession  not  justified  because  ap- 

pointment was  improper. 

144.  Receiver  entitled  to  aid  of  court  to  obtain  possession. 

145.  Courts  reluctant  to  interfere  by  receiver  with  property  of  third 

persons. 

146.  Third  persons  permitted  to  come  in  and  be  heard. 

147.  Practice  of  English  Chancery  to  compel  defendant  to  deliver 

lands  to  receiver. 

148.  New  York  practice  as  to  receiver  obtaining  possession. 

149.  Writ  of  assistance ;  when  right  of  possession  not  determined  on 

motion ;  state  and  federal  courts. 

150.  Third  person  forcibly  dispossessed  by  receiver ;  how  redressed. 

151.  Receiver  not  subject  to  garnishment  as  to  funds  in  his  possession. 

152.  Possession  as  between  different  receivers  determined  by  priority. 

153.  Right  to  possession  as  between  receiver  and  assignee  in  bank- 

ruptcy. 

154.  Rights  of  common. 

155.  Mixture  of  funds  by  auctioneer ;  right  of  receiver. 

156.  Distraint  for  rent  upon  goods  which  have  passed  into  receiver's 

possession. 


CHAP.  VI.]  POSSESSION. 


109 


§  157.    When  receiver  of  deceased  not  entitled  to  fund  held  by  creditor. 

158.  Possession  of  wharf  by  receiver :  injunction  to  restrain  interfer- 

ence with. 

159.  Possession  of  commercial  paper  by  receiver  not  that  of  bona  fide 

holder. 

160.  Defendant  relieved  from  responsibility  for  property  in  receiver's 

possession. 

161.  Receiver's  title  not  divested  by  order  when  he  is  not  a  party ; 

effect  of  appeal  on  his  possession. 

162.  Disposal  of  property  by  final  decree. 

162  a.  Right  to  possession  not  divested  when  property  taken  beyond 
state. 

§  134.  The  precise  nature  of  the  possession  held  by  a 
receiver  of  the  property  or  estate  entrusted  to  his  charge  is 
frequently  a  question  of  much  importance  in  determining 
the  relative  rights  of  conflicting  claimants  to  and  parties  in- 
terested in  the  property.  The  general  proposition  is  well 
established,  that,  the  receiver  being  the  officer  or  agent  of 
the  court  from  which  he  derives  his  appointment,  his  posses- 
sion is  exclusively  the  possession  of  the  court,  the  property 
being  regarded  as  in  the  custody  of  the  law,  in  gremio  legis, 
for  the  benefit  of  whoever  may  be  ultimately  determined  to 
be  entitled  to  its  possession.1  The  receiver's  possession, 
therefore,  is  neither  adverse  to  the  plaintiff  nor  to  the  defend- 

1  See  Robinson  v.  Atlantic  &  Great  principle  is,  that  the  possession  of 

Western  R.  Co.,   66  Pa.   St.,  160;  the  receiver  is  that  of  all  parties  to 

Skinner  v.  Maxwell,  68  N.  C,  400;  the  suit,  according  to  their  titles. 

De  Visser  v.  Blackstone,  6  Blatchf.,  As  between  the  owner  and  incum- 

235 ;  Mays  v.  Rose,  Freem.  (Miss.),  brancers,   it  is  for  some  purposes 

703;  Angel  v.  Smith,  9  Ves.,  335.  the   possession  of  the  incumbran- 

So  strictly  was  this  doctrine  ad-  cers,  who    have  obtained   or   ex- 

hered  to  by  Lord  Eldon,  that  he  tended   the  receiver;   as  between 

observed  in  the  case  last  cited,  that,  the   owner  whose    possession  has 

after  tenants  of   real  estate    had  been  displaced,  and  a  third  party, 

attorned    to  a  receiver  appointed  it  is  the  possession  of  the  former, 

over  the  premises,  the  court  itself  The  receiver  is  in  fact  his  agent ; 

became  the  landlord.     But  it  was  all  the  rents  are  applied  to  his  use, 

said  by  Mr.  Justice  Ilargreave,  in  either  by  paying  his  debts,  or  para- 

the  Landed  Estates  Court  of   Ire-  mount  charges,  or  by  being  handed 

land,  In  re  Butler's  Estate,  13  Ir.  over  to  him." 
Ch.,  N.  S.,  456,  that  "the  general 


1 10  RECEIVERS.  [CHAP.  VI. 

ant  in  the  litigation,  being  only  the  possession  of  the  court, 
which  holds  the  property  for  the  greater  safety  of  all  parties 
in  interest,  the  primary  object  being  to  secure  the  thing  in 
controversy,  so  that  it  may  be  subject  to  such  disposition  as 
the  court  may  finally  direct.1  And  the  receiver  of  a  court 
of  chancery  being  regarded  as  its  executive  officer,  in  much 
the  same  light  in  which  a  sheriff  is  the  executive  officer  of 
a  court  of  law,  the  property  in  his  possession  is  regarded 
as  in  the  custody  of  the  law,  to  the  same  extent  as  if  levied 
upon  under  an  execution  or  attachment.2  As  illustrating 
the  doctrine  that  the  receiver's  possession  is  the  possession 
of  the  court  appointing  him,  it  was  said  in  an  English  case 
that  after  tenants  of  real  estate  had  attorned  to  the  receiver 
appointed  over  the  premises,  the  court  itself  became  the 
landlord.3  But  when  property  is  in  the  actual  possession  of 
a  receiver,  he  is  regarded  as  having  such  a  special  interest 
therein  that  the  ownership  may  be  averred  in  him  in  an 
indictment  for  larceny  of  the  property.4 

§  135.  It  is  sometimes  asserted  as  a  general  principle  in 
the  reported  cases,  that  a  receiver  being  appointed  primarily 
for  the  benefit  of  all  parties*  in  interest,  his  possession  will 
be  treated  as  the  possession  of  the  party  who  is  ultimately 
determined  to  be  entitled  thereto,  and  that  when  the  ques- 
tion of  right  is  finally  determined,  the  possession  of  the 
party  prevailing  becomes  exclusive  throughout  the  whole 
period,  by  relation  to  the  date  of  the  receiver's  appoint- 
ment.5 While  this  principle  is  true  to  a  limited  extent,  as 
that  if  any  benefit  is  to  ensue  to  the  successful  party  from 
the  mere  act  of  possession,  he  will  be  regarded  as  having 
been  in  possession  from  the  first,  and  none  of  his  rights  will 
be  lost  because  of  the  receiver's  possession,  the  principle 
will  not  be  carried  to  the  extent  of  prejudicing  his  rights. 
And  when  possession  of  the  property  in  dispute  has  been 

]Mays  v.  Rose,   Freem.   (Miss.),  3  Angel  v.  Smith,  9  Yes.,  337. 

703.  "State  v-  Rivers,  60  Iowa,  381. 

2Blodgett,  J.,  In  re  Merchants  ft  See  Beverley  v.  Brooks,  4  Grat., 

Insurance  Co.,  3  Biss.,  165.  212;  Sharp  v.  Carter,  3  P.  W.,  375. 


CHAP.  VI.]  POSSESSION.  Ill 

taken  away  from  defendant  by  injunction,  and  the  property 
has  been  put  into  the  hands  of  a  receiver,  the  injunction 
rendering  the  appointment  of  a  receiver  indispensable  for 
the  protection  of  all  parties,  if  defendant  is  finally  adjudged 
to  be  entitled  to  possession  and  the  injunction  is  dissolved, 
the  receiver's  possession  during  the  interval  will  not  be 
treated  as  that  of  defendant,  so  as  to  prevent  him  from 
claiming  and  recovering  damages  because  of  the  injunction.1 
But  when  plaintiff,  in  a  bill  to  recover  possession  of  real 
estate,  obtains  a  receiver  as  against  defendant,  and  obtains  a 
verdict  in  his  favor  in  an  action  of  ejectment  to  try  the 
title,  and  the  receiver  is  then  ordered  to  surrender  possession 
to  the  plaintiff,  the  receiver's  possession  will  not  be  deemed 
that  of  the  defendant,  but  rather  of  the  plaintiff,  who  ap- 
pears to  be  entitled  to  the  premises.2  And  where  a  receiver 
of  mortgaged  premises  has  been  directed  to  pay  the  balance 
in  his  hands  to  a  mortgagee,  and  to  pass  his  accounts  pre- 
liminary to  his  final  discharge,  but  remains  in  possession 
after  such  order,  paying  the  rents  to  the  mortgagee,  his  pos- 
session after  the  date  of  the  order  will  be  regarded  as  that 
of  the  mortgagee  himself.3  But  it  would  seem  that  the  ap- 
pointment of  a  receiver  does  not  so  alter  possession  of  the 
estate  in  the  person  who  is  ultimately  found  to  have  been 
entitled  thereto  at  the  time  of  appointment,  as  to  prevent 
the  statute  of  limitations  from  running  during  the  dispute 
as  to  the  right.4 

§  136.  As  regards  the  precise  time  when  the  receiver's 
title  and  right  of  possession  attach  to  property  which  is  the 
subject  of  the  receivership,  the  better  rule  would  seem  to 
be,  as  held  in  New  York,  that  they  vest  by  relation  back  to 
the  date  of  the  original  order  for  the  appointment,  although 
the  proceedings  may  not  be  perfected  until  a  later  date ; 
and  that  the  receiver's  title  and  right  to  possession  during 
the  interval  between  such  original  order  and  the  time  of 

iSturgis  v.  Knapp,  33  Vt.,  486.  3Horlock  v.  Smith,  11   L.  J.,  N. 

2Sharp  v.  Carter,  3  P.  W.,  375.        S.  Ch.,  157;  S.  C,  6  Jur.,  478. 

4  Anonymous,  2  Atk.,  15. 


112 


EECEIVEES. 


[chap.  VI. 


perfecting  his  appointment  are  superior  to  those  of  a  judg- 
ment creditor  who  levies  upon  the  property  under  his  judg- 
ment during  such  interval.1  Thus,  when  an  order  of  reference 
is  made  to  a  master  in  chancery  for  the  appointment  of  a 
receiver,  and  the  appointment  is  afterwards  made  under  and 
pursuant  to  such  order,  the  receiver's  title  will  be  held  to 
have  vested  as  of  the  date  of  the  original  order,  and  to  have 
attached  upon  all  property  to  which  the  receivership  could 
extend,  in  like  manner  and  with  the  same  effect  as  if  the  orig- 
inal order  had  named  the  receiver,  instead  of  directing  a 
reference  for  that  purpose.2  So  when  the  order  appointing 
him  provides  that,  before  entering  upon  the  discharge  of 
his  duties,  the  receiver  shall  execute  a  bond  with  sureties, 
and  between  the  time  of  such  order  and  the  execution  of 
the  bond  the  sheriff  levies  upon  the  property,  under  an  exe- 
cution against  the  defendants,  the  receiver's  title  and  right 
to  possession,  on  perfecting  his  bond,  take  effect  back  to  the 
date  of  his  appointment,  and  the  sheriff  will  be  required  to 
surrender  possession  of  the  property  to  the  receiver.3  It  is 
to  be  observed,  however,  that  the  receiver's  title  does  not 
take  effect  back  to  the  time  of  beginning  the  action  in  which 
he  was  appointed,  so  as  to  defeat  a  levy  by  the  sheriff  under 
a  judgment  recovered  against  the  defendant  prior  to  the 
receiver's  appointment.4  And  when  the  order  appointing  a 
receiver  requires  him  to  give  a  bond  before  proceeding  to 
act  as  receiver,  until  such  bond  is  given  he  can  not  maintain 
an  action  to  recover  possession  of  the  property  over  which 
he  is  appointed.5  And  when  the  order  appointing  him  is 
stayed  by  an  appeal  and  supersedeas,  the  property  will  not 
be  deemed  in  the  custody  of  the  law  until  actually  reduced 
to  possession  by  the  receiver  after  the  affirmance  of  his  ap- 
pointment upon  the  appeal,  until  which  time  it  remains  in 


'Riitter  v.  Tallis,  5  Sandf.,  010; 
Steele  v.  Sturges,  5  Ab.  Pr.,  442. 
See.  contra,  Farmers  Bank  v. 
Beaston,  7  G.  &  J.,  421. 

2Rutter  v.  Tallis,  5  Sandf.,  010. 


3  Steele  v.  Sturges,  5  Ab.  Pr.,  442 ; 
Maynard  v.  Bond,  07  Mo.,  315. 

4  Artisans  Bank  v.  Treadwell,  84 
Barb.,  553. 

s  Phillips  v.  Smoot,  1  Mackey,  478. 


CIIAr.  VI.]  POSSESSION.  113 

the  custody  of  the  original  defendant,  who  is  authorized  to 
make  necessary  contracts  for  its  preservation  and  for  the 
protection  of  his  rights.1 

§  137.  In  Maryland,  it  is  held  that  the  appointment  of  re- 
ceivers, and  executing  bonds  for  the  faithful  performance  of 
their  duties,  will  not  operate  to  sequestrate  the  property  of 
defendant,  or  debts  due  to  him,  until  actually  reduced  to  the 
receiver's  possession.  And  an  indebtedness  due  to  a  person 
over  whose  affairs  receivers  have  been  appointed,  but  who 
have-not  taken  possession,  may  be  garnished,  notwithstand- 
ing such  appointment.  The  reason  for  the  rule  is  said  to  be, 
that  the  defendant's  effects  not  being  in  possession  of  the 
court  until  taken  into  the  receiver's  custody,  the  court  can  not 
interpose  its  summary  jurisdiction  to  punish  any  interference 
with  the  possession.  And  it  is  held  that  the  period  when 
the  effects  of  the  defendant  are  to  be  considered  as  under 
protection  of  the  court,  so  as  to  preserve  them  from  attach- 
ment, is  the  time  when  the  court  may  interpose  by  attach- 
ment to  punish  a  disturbance  or  interference  with  the 
receiver's  possession.2 

§  138.  It  is  important  to  observe  that  the  receiver's  pos- 
session is  subject  to  all  valid  and  existing  liens  upon  the 
property  at  the  time  of  his  appointment,  and  does  not  divest 
a  lien  previously  acquired  in  good  faith.3  And  when  cred- 
itors have  obtained  judgments  against  their  debtor,  which 
are  a  lien  upon  his  real  estate,  prior  to  the  appointment 
of  a  receiver  of  the  debtor's  property  and  estate,  the  receiver 
is  seized  of  the  land  subject  to  the  lien  of  the  judgments.4 
So  where  creditors  obtain  judgment  and  levy  upon  the  prop- 
erty of  the  debtor,  and  a  receiver  is  afterwards  appointed, 
who  takes  possession  of  the  property  and  sells  it,  the  sheriff 

'  Cooku.  Cole,  55  Iowa,  70.  Pr.,  121.    And  see  Bowling  Green 

-'Farmers  Bank  v.  Beaston,  7  G.  Savings  Bank  v.  Todd,  6-4  Barb., 

&  J. ,  421 .  140 ;  Lorch  v.  Aultman,  75  Ind. ,  162. 

3  Gere  v.  Dibble,  17  How.  Pr.,  31;  And    see   "Von    Roun   v.  Superior 

In  re  Nortb  American  Gutta  Court,  58  Cal.,  358. 

Percba  Co.,  id.,  549;   S.  C,  9  Ab.  <Gere  v.   Dibble,   17  How.  Pr., 

Pr.,  79;  Rich  v.  Loutrel,  18  How.  31. 

a 


114: 


RECEIVERS. 


[CHAP.  VI. 


who  made  the  levy  is  entitled  to  the  proceeds  of  such  sale.1  So 
a  receiver  can  not  maintain  replevin  for  property  which  has 
been  levied  upon  and  reduced  to  possession  by  creditors 
having  a  paramount  hen.2  And  the  appointment  of  a  re- 
ceiver over  property  which  is  subject  to  taxation  in  no 
manner  affects  or  impairs  a  hen  upon  the  property  for  taxes.3 
The  principle  extends,  also,  to  choses  in  action  of  the  defend- 
ant which  pass  to  a  receiver  by  virtue  of  his  appointment, 
and  he  takes  them  subject  to  existing  hens  thereon.  For 
example,  where  attorneys  of  a  bank  are  employed  to  fore- 
close a  mortgage,  and  pending  the  foreclosure  a  receiver  is 
appointed  of  the  affairs  of  the  bank,  the  receiver  takes  title 
to  the  mortgage  or  its  proceeds,  subject  to  the  lien  of  the 
attorneys  for  their  services,  although  such  services  can  not 
be  urged  by  way  of  set-off.  The  right  of  the  attorneys  in 
such  case  is  dependent  upon  the  common-law  hen  which  an 
attorney  has  for  his  fees  upon  the  papers  of  his  client,  as 
well  as  upon  the  proceeds  of  the  litigation,  and  the  attorneys 
will  be  required  to  pay  to  the  receiver  only  the  balance  of 
the  proceeds,  after  deducting  their  fees.  But  an  individual 
member  of  the  firm  of  attorneys  can  not,  in  such  a  case,  be 
allowed  any  lien  upon  the  proceeds  of  the  foreclosure  suit, 
as  against  the  receiver,  for  an  amount  due  him  for  services 
rendered  the  bank  by  him  individually.4 

§  139.  The  possession  of  the  receiver  being,  as  already 
shown,  regarded  as  the  exclusive  possession  of  the  court 
from  which  he  derives  his  appointment,  the  courts  are  ex- 
ceedingly averse  to  allowing  any  unauthorized  interference 
therewith,  and  will  not  tolerate  any  attempt  to  disturb  him 
in  his  rightful  possession,  without  leave  of  court  being  first 
obtained  for  that  puqoose.5    And  when  a  person  claiming 


1In  re  North  American  Gutta 
PerchaCo.,  17  How.  Pr.,  549;  S. 
C,  9  Ab.  Pr.,  79;  Rich  v.  Loutrel, 
18  How.  Pr.,  121. 

2  Conley  v.  Deere,  11  Lea,  274. 

s  Union  Trust  Co.  v.  "Weber,  96 
111.,  346. 


4  Bowling  Green  Savings  Bank  v. 
Todd,  64  Barb.,  146. 

5  Evelyn  v.  Lewis,  3  Hare,  472 ; 
Angel  v.  Smith,  9  Ves.,  335;  Russell 
v.  East  Anglian  R.  Co.,  3  Mac.  & 
G.,  104;  Ames  v.  Trustees  of  Birk- 
enhead    Docks,    20    Beav.,     332; 


ciiAr.  vi. J  possession.  115 

any  interest  in  the  subject-matter  of  the  litigation  is  prej- 
udiced by  the  appointment  of  a  receiver,  or  desires  to 
assert  his  rights,  the  proper  course  is  for  the  court  either 
to  give  him  leave  to  bring  an  action,  or  to  permit  him 
to  be  examined  pro  interesse  suo,  the  latter  being  gen- 
erally regarded  as  the  most  convenient  and  desirable  prac- 
tice.1 Thus  the  court  will  not  permit  a  claimant  of  real 
estate  which  is  in  possession  of  its  receiver,  to  bring  an 
action  of  ejectment  without  first  obtaining  leave  for  that 
purpose.2  And  ordinarily,  when  real  estate  is  in  the  act- 
ual possession  of  a  receiver,  an  action  of  ejectment  Avili 
not  be  maintained  against  him  in  another  court,  but  the 
claimant  will  be  permitted  to  pursue  his  remedy  against 
the  receiver  in  the  action  in  which  he  was  appointed.3  And 
if  property  or  funds  in  the  receiver's  possession  are  claimed 
by  third  persons  not  parties  to  the  action  in  which  he  was 
appointed,  a  petition  or  motion  may  be  presented  to  the 
court  for  an  order  on  the  receiver  to  deliver  over  the  fund 
or  property  to  the  claimant.4  The  remedy  of  a  person 
claiming  title  to  the  property  is  not  to  regain  it  by  an  act 
of  trespass,  but  to  apply  to  the  court  for  redress  or  for  leave 
to  sue  the  receiver.5  And  in  thus  restricting  claimants 
or  third  parties  from  interfering  with  the  receiver's  posses- 
sion without  leave,  the  rule  is  applied  regardless  of  whether 
such  persons  claim  paramount  to  or  under  the  right  which 
the  receiver  was  appointed  to  protect.1* 

§  140.     This  exclusive  possession  of  the  receiver  may  be 
and  frequently  is  protected  by  the  aid  of  an  injunction  re- 
Brooks  v.  Greathed,  1  Jac.  &  W.,    Ch.,  357.     See,    also,  Skinner   v. 
176 ;  DeWinton  v.  Mayor  of  Brecon,    Maxwell,  68  N.  C.,  400. 
28  Beav.,   200;  Spinning  v.   Ohio        2  Angel  v.  Smith,  9  Ves< ,  335. 
Life    Insurance  and  Trust  Co. ,   2        3  Fort  Wayne,  M.  &  C.  R.  Co.  v. 
Disney,    368;  Vermont  &  Canada    Mellett,  92  Ind.,  535. 
R.  Co.  v.  Vermont  Central  R.  Co.,        4Riggs  v.  Whitney,  15  Ab.  Pr., 
46  Vt.,  792;  Ex  parte  Cochrane,  L.     388. 
R.,  20  Eq.,  282.  5/ji  re   Day,  34  Wis.,  638;  Ex 

i  Brooks  v.  Greathed,  1  Jac.  &    parte  Cochrane,  L.  R.,  20  Eq.,  282. 
W.,  176;  Brien  v,  Paul,  3  Tenn.        « Evelyn  v.  Lewis,  3  Hare,  472. 


116  KECEIVEKS.  [CHAP.  VI. 

straining-  any  unauthorized  interference  with  the  property, 
or  the  unauthorized  prosecution  of  suits  against  the  receiver 
for  its  recovery.1  And  when  a  claimant  is  asserting  his 
title  by  an  action  at  law  to  property  held  by  a  receiver, 
without  having  obtained  leave  of  the  court  to  institute  such 
action,  he  may  be  enjoined,  on  the  application  of  the  re- 
ceiver, from  proceeding  with  his  action,  regardless  of  how- 
ever clear  his  right  may  be,  or  of  whether  he  was  apprised 
of  the  receiver's  appointment  when  he  brought  his  action 
at  law ; 2  since  the  claimant,  although  he  may  have  a  clear 
legal  right  to  the  property,  will  not  be  allowed  to  disturb 
the  receiver's  possession  until  he  has  established  his  right 
by  proper  proceedings  for  that  purpose.  Thus,  when  a  re- 
ceiver is  appointed  over  certain  church  property,  and  a 
churchwarden,  claiming  to  be  legally  entitled  thereto,  takes 
possession  by  force  and  prevents  the  minister  from  holding 
religious  services,  an  injunction  may  be  granted  to  restrain 
such  unauthorized  interference  with  the  receiver's  posses- 
sion.3 And  an  injunction  is  sometimes  granted,  although 
the  party  enjoined  is  proceeding  in  the  exercise  of  a  right 
given  by  statute.  Thus,  where  real  estate  is  in  possession 
of  a  receiver,  and  a  railway  company,  desiring  a  portion  of 
it  for  the  construction  of  its  road,  institutes  proceedings  for 
condemnation  in  accordance  with  statute,  but  without  ob- 
taining leave  of  the  court  before  interfering  with  the  re- 
ceiver's possession,  an  injunction  may  be  granted  restraining 
the  company  from  proceeding  until  further  order  of  court.4 
§  141.  So  extremely  jealous  are  courts  of  equity  of  any 
interference,  pendente  lite,  with  the  possession  of  their  re- 
ceivers, that  they  will  not  ordinarily  permit  property  which 
is  the  subject  of  the  receivership  to  be  sold  on  execution.5 

iTink  v.  Bundle,  10  Beav.,  318;        3  Attorney-General    v.   St.   Cross 

Attorney-General  v,  St.  Cross  Hos-  Hospital,  18  Beav.,  601. 
pital,   IS    Beav.,    601;    Evelyn    v.        4Tink  v.  Bundle,  10  Beav.,  318. 
Lewis,    3    Hare,    472;    Johnes    v.        5  Robinson    v.  Atlantic  &  Great 

Claughton,  Jac.,  573.  Western  B.   Co.,  66  Ba.   St.,  160; 

2  Evelyn  v.  Lewis,  3  Hare,  472.  Skinner  v.  Maxwell,  68  N.  C,  400; 


CHAP.  VI.]  POSSESSION.  117 

And  -when  a  sheriff  has  levied  upon  property  in  the  hands 
of  a  receiver,  equity  will  not  interpose  by  an  injunction  in 
behalf  of  the  sheriff,  to  restrain  an  action  at  law  against 
him  for  such  interference.1  The  proper  remedy  for  a  judg- 
ment creditor,  who  desires  to  question  the  receiver's  right 
to  the  propert}r,  is  to  apply  to  the  court  appointing  him,  to 
have  the  property  released  from  the  receiver's  custody,  in 
order  that  he  may  proceed  against  it  under  his  judgment;2 
since  to  permit  the  property,  while  in  custody  of  the  re- 
ceiver, to  be  levied  upon  and  sold  under  the  process  of 
another  court,  would  at  once  give  rise  to  a  conflict  of  juris- 
diction and  would  seriously  interfere  with  and  impair  the 
receiver's  right  to  the  management  of  the  property.3  So 
when  real  estate  is  in  the  actual  possession  of  a  receiver, 
pending  litigation  as  to  the  title,  it  is  not  subject  to  levy  and 
sale  under  execution  to  satisfy  a  judgment  rendered  subse- 
quent to  the  receiver's  appointment.4  And  when  the  judg- 
ment was  obtained  before  the  appointment,  but  the  lien 
was  not  acquired  by  placing  an  execution  in  the  hands  of 
the  sheriff  until  after  the  appointment,  it  was  held  that  a 
purchaser  under  the  execution  sale,  the  real  estate  being 
then  in  the  receiver's  possession,  and  the  sale  being  made 
without  leave  of  court,  acquired  no  title,  and  the  court  re- 
fused to  put  him  into  possession.5  And  while  the  principle, 
as  above  stated,  is  not  understood  as  prohibiting  absolutely 
the  acquisition  of  new  rights  to  the  fund  or  property  in 
controversy,  pending  the  receiver's  possession,  it  yet  pre- 
vents the  person  so  acquiring  rights  from  asserting  them  by 
the  process  of  another  court,  thus  compelling  him  to  apply 
to  the  court  having  jurisdiction  over  the  property  and  the 
receiver,  for  a  determination  of  his  rights.     And  it  matters 

Wiswall  v.  Sampson,  14  How.,  52;  See  Wiswall  v.  Sampson,  14  How., 

Edwards  v.  Norton,  55  Tex.,  405.  52. 

iTry  r.  Try,  13  Beav.,  422.  3  Robinson  v.  Atlantic  &  Great 

2Robinson  v.  Atlantic  &  Great  Western  R.  Co.,  66  Pa.  St.,  160. 

"Western  R.  Co.,  66  Pa.  St.,  160;  4  Edwards  v.  Norton,  55  Tex.,  405. 

Dugger  v.   Collins,   69    Ala.,   324.  »  Dngger  v.  Collins,  69  Ala.,  324. 


118 


RECEIVERS. 


[chap.  VI. 


not,  in  such  case,  that  the  receiver  has  declined  to  act,  since 
the  property  is  still  in  custody  of  the  law.1 

§  142.  As  still  further  illustrating  the  aversion  enter- 
tained by  courts  of  equity  toward  any  interference  with  the 
possession  of  their  receivers,  it  is  held  that  a  receiver  is  not 
justified  in  paying  out  money  in  any  other  manner  than 
upon  the  order  of  the  court  appointing  him,  and  that  this 
court  will  not  sanction  a  payment  made  by  the  receiver, 
even  upon  the  compulsory  process  of  another  court.  And 
when  a  judgment  creditor  has  attached  money  in  the  hands 
of  a  receiver,  under  proceedings  instituted  in  a  court  of  law, 
and  has  obtained  an  order  therein  for  payment  of  the  money 
attached,  which  order  is  obeyed  by  the  receiver,  such  pay- 
ment will  not  be  allowed  by  the  court  in  passing  his  ac- 
counts.2 


i  Skinner  v.  Maxwell,  68  N.  C, 
400.  The  court,  Rodman,  J.,  say, 
p.  404:  "When  a  court  of  equity 
has  undertaken  to  adjudicate  upon 
and  distribute  a  fund  among  the 
parties  entitled  to  it,  it  would  be 
inconvenient  for  the  court  of  law, 
or  any  other  court,  by  its  process, 
to  interrupt  the  adjudication  and 
create  new  rights  in  the  property 
itself.  This  rule  is  not  understood 
as  absolutely  preventing  the  ac- 
quisition of  new  rights  to  the  fund 
in  controversy  after  the  commence- 
ment of  the  proceedings.  Any 
person  claiming  to  have  acquired 
such  an  interest  pendente  lite, 
while  he  can  not  interfere  un- 
der the  process  of  another  court, 
may  apply  to  the  court  which  has 
jurisdiction  of  the  fund,  pro  inter- 
esse  suo,  and  his  claim  will  be 
heard.  The  limits  of  this  principle 
are  somewhat  uncertain,  but  it  is 
sufficient  for  the  present  case  to 
say  that,  while  the  property  is  in 
the  hands  of  a  receiver,  no  right  to 


it  can  be  acquired  by  sale  under 
execution.  And  it  makes  no  dif- 
ference that  the  receiver  appointed 
declined  to  act;  the  property  was 
nevertheless  in  the  custody  of  the 
law." 

2  De  Winton  v.  Mayor  of  Brecon, 
28  Beav.,  200.  Lord  Romilly,  Mas- 
ter of  the  Rolls,  observes,  p.  202 : 
" .  .  I  apprehend  this  is  clear, 
that  the  court  never  allows  any 
person  to  interfere,  either  with 
money  or  property  in  the  hands  of 
its  receiver,  without  its  leave; 
whether  it  is  done  by  the  consent 
or  submission  of  the  receiver,  or  by 
compulsory  process  against  him. 
The  court  is  obliged  to  keep  a  strict 
hand  over  property  in  the  hands  of 
a  receiver,  or  which,  by  virtue  of 
the  order  of  the  court,  may  come 
into  his  hands,  in  order  to  preserve 
entire  jurisdiction  over  the  whole 
matter,  and  to  do  that  which  is 
just  in  the  cause  between  the 
parties.  It  is  always  to  be  remem- 
bered that  the  receiver  in  this  case 


CHAP.  VI.]  POSSESSION.  119 

§  143.  Courts  of  equity  will  not  permit  any  unauthorized 
interference  with  the  possession  of  their  receivers  to  be  jus- 
tified upon  the  ground  that  the  appointment  of  the  receiver 
was  ill-advised  or  illegal,  and  that  the  parties  interfering 
were,  therefore,  not  bound  to  regard  it.  It  is  sufficient  that 
there  is  a  subsisting  order  of  the  court  appointing  a  receiver ; 
and  parties  dissatisfied  therewith,  or  deeming  such  order 
erroneous,  must  take  the  proper  course  to  question  its  valid- 
ity by  application  to  the  court  itself,  and  it  is  not  compe- 
tent for  any  person  to  interfere  with  the  receiver's  possession 
upon  the  ground  that  his  appointment  was  improvidently 
made.1  The  appropriate  course  in  all  cases,  where  parties 
are  desirous  of  obtaining  possession  of  property  which  has 
come  into  the  hands  of  a  receiver,  is  to  apply  to  the  court 
from  which  he  derives  his  appointment ;  and  the  rule  is  not 
limited  to  property  actually  in  the  receiver's  possession,  but 
extends  also  to  property  which  he  has  been  appointed  to 
receive,  but  which  he  has  not  yet  reduced  to  possession.2 

would  not  have  got  a  penny,  except  property  he  is  directed  to  receive, 

by  the  order  of  the  court  enabling  by  any  one,  although  the  order  ap- 

him  to  receive  it,  and  entitling  hhn  pointing  him  may  be  perfectly  er- 

to  give  a  good  discharge  to  the  per-  roneous;    this  court  requires  and 

son  who  paid  it ;  and,  consequently,  insists  that  application  should  be 

it  is  strictly  money  belonging  to  made  to  the  court  for  permission  to 

the  court  of  chancery,  and  the  re-  take  possession  of  any  property  of 

ceiver  can  only  discharge  liimself  which  the  receiver  either  has  taken 

by  paying  it  in  obedience  to  the  or  is  directed  to  take  possession, 

direction  and  order  of  that  court."  and  it  is  an  idle  distinction  (which 

i  Russell  v.  East  Anglian  R.  Co.,  could  not  be  maintained  if  it  were 

3  Mac.  &  G.,  104:  Ames  v.  Trust-  attempted,  which  it  is  not  by  coun- 

ees  of  Birkenhead  Docks,  20  Beav.,  sel  at  the  bar,  though  suggested  by 

332;    Cook    v.    Citizens     National  the  affidavits),  that  this  rule  only 

Bank,  73  Ind.,  256.  applies  to  property  actually  in  the 

2  Ames  v.  Trustees  of  Birkenhead  hands  of  the  receiver.     If  a  receiv- 

Docks,  20 Beav.,  332.     "There  is  no  er  be  appointed  to  receive  debts, 

question,"  says  Lord  Romilly,  Mas-  rents    or    tolls,    the    rule    applies 

ter  of  the  Rolls,  p.  353,  "but  that  equally  to  all  these  cases,  and  no 

this  court  will  not  permit  a  receiver,  person  will  be  permitted,  without 

appointed  by  its  authority,  and  who  the  sanction  or  authority  of  the 

is  therefore  its  officer,  to  be  inter-  court,  to  intercept  or  prevent  pay- 

fered  with  or  dispossessed  of  the  ment  to  the  receiver  of  the  debts, 


120 


RECEIVERS. 


[chap.  TT. 


§  144.  The  receiver,  being'  the  officer  or  agent  of  the 
court,  is  entitled  to  its  assistance  in  obtaining  possession  of 
property  which  is  the  subject-matter  of  his  receivership,  and 
may  have  an  order  of  court  to  procure  possession  of  such 
property,  not  only  against  defendant  in  the  action,  but  in  a 
proper  case  against  his  agents  and  employes,  although  not 
parties  to  the  record,  requiring  them  to  deliver  up  the  spe- 
cific property.1  And  when  a  receiver  is  appointed  over  real 
property,  of  which  the  owner  is  in  possession,  the  proper 
course  is  to  apply  to  the  court  to  have  the  owner  deliver 
possession  to  the  receiver,  since  the  latter  can  not  distrain 
upon  the  owner  in  possession,  as  he  is  not  a  tenant  of  the 
receiver.2  Such  procedure  does  not  conflict  with  the  prin- 
ciple that  no  man  shall  be  deprived  of  his  property  without 
due  process  of  law,  since  the  surrender  to  the  receiver  does 
not  affect  the  ultimate  question  of  the  right  to  the  property, 
any  more  than  does  the  levy  of  an  attachment ;  the  purpose 
being  merely  to  secure  the  property  by  getting  it  into  the 
receiver's  possession,  so  that  it  may  be  safely  delivered  to 
the  party  who  shall  be  finally  determined  to  be  entitled 
thereto.3  And  the  order  for  the  surrender  of  property  to 
the  receiver  may,  if  necessary,  be  enforced  by  process  of 
attachment.4  And  when  a  receiver  has  been  appointed  to 
take  charge  of  certain  trust  funds  held  by  defendant,  the 
court  may  require  defendant's  attorney  to  appear  before  the 
receiver,  and  to  deliver  to  him  all  the  trust  property  which 
may  have  come  to  his  hands  since  the  suit  was  instituted, 
and  to  compel  him  to  render  an  account  and  inventory  of 
such  property,  and  to  verify  it  under  oath.5  So  when  a 
party  to  the  cause  executes  a  lease  of  real  property  to  a 
third  person,  both  lessor  and  lessee  having  full  knowledge 


rents  or  the  tolls,  which  he  has  not 
actually  received,  hut  which  he  is 
appointed  to  receive." 

lInre  Cohen,  5  Cal.,  494.     See, 
also,  Geisse  v.  Beall,  5  Wis.,  224; 


Green  v.  Green,  2  Sim.,  430.     See, 
also,  Miller  v.  Jones,  39  111.,  54. 

2  Griffith  v.  Griffith,  2  Ves.,  400. 

3  In  re  Cohen,  5  Cal.,  494. 

*  Miller  v.  Jones,  39  111.,  54. 
5  Geisse  v.  Beall,  5  Wis.,  224. 


CHAT.  VI.]  POSSESSION.  121 

that  a  receiver  has  been  appointed  over  the  property,  how- 
ever valid  such  lease  may  be  as  between  the  parties,  it  con- 
fers no  right  as  against  the  receiver,  and  he  is  entitled  to  a 
writ  of  possession  as  against  the  lessee.1 

§  145.     It  is  to  be  borne  in  mind,  however,  in  considering 
the  extent  to  which  a  court  of  equity  will  aid  its  receiver  to 
obtain  possession  of  property,  that  the  court  is  always  re- 
luctant to  interfere  with  the  right  of  possession  by  parties 
claiming  a  legal  title  to  the  property.2    And  while  it  is  com- 
petent for  the  court,  by  an  interlocutory  order,  to  take 
possession  of  property  by  its  receiver  pending  litigation  con- 
cerning the  rights  of  the  parties,  yet  when  the  rights  of 
third  persons  have  intervened  who  are  not  parties  to  the 
record,  as  in  the  case  of  purchasers  in  good  faith  of  the 
property  in  contest,  the  court  will  decline  to  take  possession 
by  its  receiver.     The  interference  is  withheld  under  such 
circumstances,  upon  the  ground  that  the  rights  of  purchasers 
in  good  faith  are  not  to  be  adjudicated  and  determined  by 
the  summary  method  of  an  order  to  surrender  possession  to 
a  receiver.3    And  when  the  plaintiff  seeks  to  have  an  actual 
.  delivery  of  defendant's  property  to  the  receiver,  some  of 
which  is  claimed  by  a  third  person  under  an  assignment 
from  defendant,  the  question  as  to  what  property  is  under 
defendant's  control  must  first  be  determined,  before  he  will 
be  directed  to  deliver  it  to  the  receiver.4     So  when  a  banker, 
holding  a  specific  fund  in  his  possession,  makes  an  assign- 
ment for  the  benefit  of  his  creditors,  and  a  receiver  is  after- 
ward appointed  over  the  fund  in  question,  the  court  will 
not  upon  summary  motion  compel  the  assignees  to  pay  the 
money  to  the  receiver.5     And  the  court  will  not,  upon  a  sum- 
mary application,  compel  a  delivery  to  the  receiver  of  prop- 

1  Thornton    v.  Washington  Sav-        ^Cassilear    v.   Simons,   8   Paige, 
ings  Bank,  76  Va. ,  432.  273.    And  see  Parker  v.  Browning, 

2  Cassilear    v.   Simons,   8  Paige,     8  Paige,  389. 

273;  McCombs   v.    Merryhew,    40        5  Coleman  v.  Salisbury,  52  Ga., 
Mich.,  721.  470. 

3  Levi  v.  Karrick,  13  Iowa,  344. 


122  RECEIVERS.  [CHAP.  VI. 

erty  purchased  at  a  sheriff's  sale,  under  execution  against 
the  defendant,  when  the  purchaser's  agent  is  shown  to  be 
exercising  control  over  the  property,  with  the  power  of  re- 
ducing it  at  any  time  to  actual  possession.  Under  such  cir- 
cumstances, the  court  will  first  require  the  purchaser  to  be 
made  a  party  to  the  litigation,  that  he  may  have  an  oppor- 
tunity to  defend  his  title  and  right  of  possession.1 

§  146.  When  a  receiver  is  in  possession  of  real  estate 
'pendente  lite,  although  the  court  will  not  permit  his  posses- 
sion to  be  interfered  with  by  third  persons  without  its  con- 
sent, such  persons  will  be  permitted  to  come  in  and  be  heard 
with  reference  to  their  interests,  and  such  orders  will  be 
made  as  are  necessary  to  protect  their  rights  in  the  subject- 
matter  of  the  litigation,  until  they  can  be  finally  determined. 
For  example,  when  a  receiver  is  appointed  over  the  premises 
in  controversy,  and  a  third  party  is  entitled  to  a  portion  of 
the  premises  in  right  of  his  wife,  but  a  proceeding  for  divorce 
is  pending  on  the  part  of  the  wife  against  the  husband,  in 
which  she  claims  the  entire  rents  and  profits,  while  the  court 
will  not  determine  the  relative  rights  of  the  husband  and 
wife  upon  an  application  for  payment  of  the  money  to  the 
former,  it  will  direct  the  receiver  to  pay  that  portion  of  the 
rents  into  court,  to  await  the  result  of  the  litigation  between 
husband  and  wife.2  And  when  a  receiver  had  been  ap- 
pointed of  the  rents  and  profits  of  real  estate  in  behalf  of 
a  person  having  a  life  estate  therein,  and  directed  to  pay  the 
rents  to  such  person,  and  in  another  action  an  order  for 
costs  had  been  made  against  the  same  tenant  for  life,  the 
court  gave  the  successful  party  leave  to  prosecute  proceed- 
ings for  costs  against  the  life  estate,  notwithstanding  the 
appointment  and  possession  of  the  receiver.3 

§  147.  Under  the  practice  of  the  English  Court  of  Chan- 
cery, when  it  was  sought  to  compel  a  defendant  to  deliver 
up  possession  of  lands  to  a  receiver  appointed  in  the  cause, 
an  order  was  first  obtained  to  deliver  possession,  and  a  writ 

Robeson  v.  Ford,  3  Edw.  Ch.,        2  Vincent  v.  Parker,  7  Paige,  65. 
441.  3  Gooch  v.  Haworth,  3  Beav.,  428. 


CHAP.  VI.]  POSSESSION. 


123 


of  execution  of  such  order  was  then  served  upon  defendant. 
And  until  this  was  done  no  further  order  would  be  made  by 
the  court.1 

§  148.  Under  the  former  chancery  practice  in  R"ew  York, 
when  a  receiver  was  appointed  and  invested  under  decree  of 
the  court  with  the  title  to  real  and  personal  property  in  con- 
troversy, and  defendants  were  required  by  the  decree  to  de- 
liver the  property  to  the  receiver,  it  was  held  that  he  himself 
might  take  the  necessary  steps  to  obtain  possession  and  con- 
trol of  the  property,  and  that  he  need  not  wait  for  the 
parties  to  the  litigation  to  move  in  the  matter,  it  being  his 
duty  to  protect  and  preserve  the  property  for  the  interests 
of  all  parties  concerned.2 

§  149.     While  a  court  of  equity  will,  in  a  proper  case, 
freely  extend  its  aid  by  a  writ  of  assistance,  to  enable  a  re- 
ceiver to  obtain  possession  of  property  to  which  he  is  en- 
titled, it  will  not  thus  interfere  upon  mere  motion,  as  against 
the  possession  of  a  stranger  to  the  action,  claiming  a  supe- 
rior title  under  which  he  holds  possession,  but  will  leave  the 
disputed  question  of  title  to  be  determined  by  an  action  for 
that  purpose.     For  example,  when  a  receiver  is  in  posses- 
sion of  property  under  appointment  from  a  United  States 
court,  the  state  courts  will  not  grant  a  writ  of  assistance  to 
a  subsequently  appointed  receiver  in  the  state  tribunal,  to 
enable  him  to  get  possession  of  the  same  property.     The 
possession  of  the  receiver  appointed  by  the  federal  court, 
in  such  a  case,  is  regarded  as  the  possession  of  a  stranger, 
whose  rights  can  not  be  determined  arbitrarily  and  upon  a 
mere  motion,  but  only  by  a  regular  action  at  law.     And  it 
can  make  no  difference  that  the  jurisdiction  of  the  federal 
court,  to  entertain  the  action  in  which  its  receiver  was  ap- 
pointed, is  assailed  and  denied,  since  that  is  a  question  of 

I  Green  v.  Green,  2  Sim. ,430.  See,  of    the    authorities,    English    and 

also,  Griffith  v.  Griffith,  2  Ves.,  400.  American,  upon  the  right  of  the  re- 

2Iddings  v.  Bruen,  4  Sandf.  Ch.,  ceiver  to  initiate  any  action  con- 

417.    And  see  tins  case  for  a  review  cerning  Ins  receivership. 


124: 


EECEIVEKS. 


[chap.  VI. 


too  great  importance  to  be  disposed  of  merely  by  a  motion 
in  the  state  court.1 

§  150.     While  it  is  true,  when  property  is  legally  and 
properly  in  possession  of  a  receiver,  that  it  is  the  duty  of 


1  Gelpeke  v.  Milwaukee  &  Hori- 
con  R.  Co.,  11  Wis.,  451.  "  I  know 
of  no  case,"  says  Dixon,  C.  J., 
page  457,  "where  it  has  been  ad- 
judged that  the  possession  of  a 
stranger,  who  sets  up  a  superior 
title,  in  pursuance  of  which  he 
claims  to  have  entered  and  to  hold, 
might  be  thus  disturbed.  In  such 
cases  it  has  been  the  uniform  rule 
to  leave  the  parties  to  their  reme- 
dies by  action.  And  in  this  case  I 
think  that  the  circuit  judge  erred 
in  proceeding  to  award  the  writ  as 
against  Mr.  Ward,  when  it  ap- 
peared that  he  was  in  possession  by 
virtue  of  the  order  of  the  district 
court,  made  in  a  proceeding  to  fore- 
close a  mortgage  which  had  been 
previously  executed  by  the  corpo- 
ration defendant.  When  this  was 
made  to  appear,  he  should  have 
arrested  the  proceeding,  and  turned 
the  parties  over  to  their  appropriate 
remedy  by  action.  His  attempt  to 
adjudicate  upon  and  settle  the 
rights  of  Mr.  Ward,  upon  a  mere 
motion,  supported  by  affidavits, 
was  unauthorized.  Such  was  not 
the  proper  mode  of  proceeding  by 
which  to  determine  his  rights.  It 
is  only  adapted  to  those  cases 
where  the  court  can  say,  clearly 
and  unhesitatingly,  that  the  pos- 
session is  subsequent  to  the  com- 
mencement of  the  action,  and 
subject  to  the  decree  or  order 
which  has  been  made,  or  that  the 
person  holding  the  same  has  no 
legal  right.    And  it  could  make  no 


difference  that  the  jurisdiction  of 
the  district  court  (of  the  United 
States)  to  entertain  those  actions 
was  assailed  and  denied.  That,  too, 
was  a  question  of  great  gravity 
and  importance,  and  not  to  be  dis- 
posed of  with  the  same  speed  and 
facility  that  we  would  strike  out 
an  obviously  frivolous  answer  or 
demurrer.  It  was  one  which  ad- 
mitted of,  at  least,  some  doubt, 
and  upon  either  side  of  which  the 
most  learned  counsel  would  not 
think  it  unbecoming  or  improper 
to  spend  many  hours  or  days  in 
earnest  argument,  before  any  court 
where  it  should  be  raised.  And 
the  very  fact  that  it  would  admit 
of  such  doubt  or  argument  was 
sufficient  to  exclude  it  from  the 
consideration  of  the  court,  upon 
such  a  motion.  For  that  reason  I 
was  opposed  to  and  refused  to  hear 
its  discussion  in  this  court  upon 
the  present  motion.  Courts  can 
only  act,  in  such  cases,  where  the 
rights  of  the  parties  are  obvious, 
and  not  the  subjects  of  doubts  or 
serious  controversy.  It  was  urged 
that  unless  the  question  involved 
could  be  determined  in  this  pro- 
ceeding, that  then  the  receiver  was 
remediless,  and  there  was  no  form 
of  action  in  which  Mr.  Ward,  ad- 
mitting his  possession  to  be  with- 
out warrant  of  law,  could  be 
deposed.  I  can  not  agree  to  this 
proposition.  I  think  it  may  be 
done  by  some  one  of  the  forms  of 
action  now  in  use." 


CHAP.  VI.] 


POSSESSION. 


125 


the  court  to  protect  that  possession,  not  only  as  against  acts 
of  violence,  but  in  some  instances  even  against  actions  at 
law,  so  that  a  third  person  claiming  the  property  may  be 
compelled  to  come  in  and  be  examined  pro  inter  esse  suo  in 
the  original  action;  yet  the  case  is  different  if  the  property 
is  in  possession  of  a  third  person,  under  claim  of  right,  and 
is  forcibly  taken  from  his  possession  by  the  receiver  without 
any  order  of  court.  Under  such  circumstances,  neither  the 
order  of  court  appointing  the  receiver,  nor  the  construction 
of  its  order,  being  in  question,  and  a  complaint  being  made 
of  misconduct  on  the  part  of  an  officer  of  the  court,  acting 
under  color  of  authority  merely,  the  court  may,  in  its  dis- 
cretion, either  take  cognizance  of  the  complaint  and  do  jus- 
tice between  its  officer  and  the  party  aggrieved,  or  it  may 
permit  the  latter  to  bring  an  action  at  law  for  his  alleged 
injury.  And  the  latter  course  would  seem  to  be  preferable, 
in  order  that  the  benefit  of  a  trial  by  jury  may  be  had.1 


1  Parker  v.  Browning,  8  Paige,  388. 
This  was  an  appeal  by  a  receiver 
from  an  order  allowing  certain  peti- 
tioners to  bring  an  action  against 
the  receiver,  and  other  persons  act- 
ing under  him,  for  an  alleged  tres- 
pass in  forcibly  entering  a  store 
which  petitioners  claimed  to  belong 
to  them  and  to  be  in  their  possession, 
and  taking  the  goods  therefrom. 
Walworth,  Chancellor,  says,  p.  389  ■ 
' '  Tbere  is  certainly  room  for  doubt 
in  this  case,  whether  the  defendant 
Browning  had  not  some  interest  in 
the  store  of  goods.  And  if  the  re- 
ceiver had  taken  possession  thereof 
under  the  express  directions  of  the 
court,  or  if  the  master  had  decided 
that  the  goods  were  in  the  posses- 
sion and  under  the  power  and  con- 
trol of  the  defendant,  and  had 
directed  him  to  deliver  the  posses- 
sion thereof  to  the  receiver,  this 
court  ought  to  have  assumed  the 


exclusive  jurisdiction  over  the  sub- 
ject of  complaint,  instead  of  suffer- 
ing its  officer  to  be  harassed  in  a 
suit  at  law  for  obeying  its  order. 
But  as  I  understand  the  case,  the 
validity  of  the  order  appointing  the 
receiver  is  not  in  controversy  here, 
nor  is  Iris  right  to  take  the  property 
of  the  defendant  Browning,  as  such 
receiver,  intended  to  be  questioned. 
The  petitioners,  on  the  contrary, 
claim  that  the  receiver,  without 
any  direction  to  that  effect  from 
the  court,  has  forcibly  taken  goods 
which  belong  to  them  exclusively, 
out  of  their  possession,  under  the 
pretense  that  such  goods  were  the 
property  of  the  defendant  Brown- 
ing. Where  the  authority  of  the 
court  or  the  construction  of  its 
order  is  not  in  question,  but  the 
complaint  is  made  against  the  mis- 
conduct of  its  officer,  acting  under 
color    of    authority    merely,    this 


126 


EECEIVEES. 


[CHAP.  VI. 


§  151.     The  receiver's  possession  being  the  possession  of 
the  court  from  which  he  derives  his  appointment,  he  is  not 


court  may,  in  its  discretion,  either 
take  to  itself  the  cognizance  of  the 
complainant  and  do  justice  between 
its  officers  and  the  parties  aggrieved, 
or  it  may  permit  the  latter  to  bring 
a  suit  at  law  for  the  alleged  injury. 
And  in  cases  of  tins  description  it 
is  more  in  accordance  with  the 
spirit  of  our  institutions  to  permit 
the  parties  complaining  to  proceed 
at  law,  where  they  may  have  the 
benefit  of  a  jury  trial,  than  to  at- 
tempt to  settle  their  rights  by  a 
reference  to  a  master.  It  is  not 
necessary  in  any  case  for  the  re- 
ceiver to  put  himself  in  a  situation 
where  he  is  not  entitled  to  the  full 
protection  of  this  court;  as  he  is 
under  no  obligation  to  attempt  to 
take  property  out  of  the  possession 
of  a  third  person,  or  even  out  of 
the  possession  of  the  defendant 
himself,  by  force,  and  without  an 
express  order  of  the  court  directing 
him  to  do  so.  The  proper  course, 
as  this  court  has  repeatedly  decided, 
where  the  defendant  is  directed  to 
deliver  over  his  property  to  the  re- 
ceiver under  the  direction  of  a 
master,  is  for  the  receiver,  or  the 
party  who  wishes  for  an  actual  de- 
livery of  the  property  in  addition 
to  the  legal  assignment  thereof,  to 
call  upon  the  master  to  decide, 
upon  the  examination  of  the  de- 
fendant, and  on  the  evidence  before 
him,  what  property  legally  or 
equitably  belonging  to  the  defend- 
ant, and  to  which  the  receiver  is 
entitled  under  the  order  of  the 
court,  is  in  the  possession  of  the 
defendant  or  under  his  power  and 
control.    And  it  is  the  duty  of  the 


master  to  direct  the  defendant  to 
deliver  over  to  the  receiver  the 
actual  possession  of  all  such  prop- 
erty, in  such  manner  and  within 
such  time  as  the  master  may  think 
reasonable.  "Where  such  a  direc- 
tion is  given,  the  defendant,  if  he 
is  dissatisfied  with  the  decision  of 
the  master,  must  apply  to  the  court 
to  review  the  same,  or  he  will  be 
compelled  by  process  of  contempt 
to  comply  with  that  decision.  And 
if  the  property  is  in  the  possession 
of  a  third  person  who  claims  the 
right  to  retain  it,  the  receiver  must 
either  proceed  by  suit,  in  the  ordi- 
nary way,  to  try  his  right  to  it,  or 
the  complainant  should  make  such 
third  person  a  party  to  the  suit, 
and  apply  to  have  the  receivership 
extended  to  the  property  in  his 
hands,  so  that  an  order  for  the  de- 
livery of  the  property  may  be  made 
which  will  be  binding  upon  him, 
and  which  may  be  enforced  by 
process  of  contempt,  if  it  is  not 
obeyed.  Where  the  property  is 
legally  and  properly  in  the  posses- 
sion of  the  receiver,  it  is  the  duty 
of  the  court  to  protect  that  posses- 
sion, not  only  against  acts  of  vio- 
lence but  also  against  suits  at  law ; 
so  that  a  third  person,  claiming  the 
same,  may  be  compelled  to  come  in 
and  ask  to  be  examined  pro  inter- 
esse  suo,  if  he  wishes  to  test  the 
justice  of  such  claim.  But  where 
the  property  is  in  the  possession  of 
a  third  person,  under  a  claim  of 
title,  the  court  will  not  protect  the 
officer  who  attempts  by  violence  to 
obtain  possession,  any  further  than 
the  law  will  protect  him ;  his  right 


CHAP.  VI.]  POSSESSION.  127 

subject  to  process  of  garnishment  as  to  funds  in  his  hands 
or  subject  to  his  control,  and  such  process  will  be  regarded 
as  a  nullity  when  directed  against  him.1  And  when  a  re- 
ceiver is  duly  appointed  of  the  effects  of  a  copartnership, 
in  an  action  brought  by  a  creditor  of  the  firm,  he  can  not 
be  garnished  by  judgment  creditors  of  the  firm,  as  to  part- 
nership assets  in  his  hands,  such  assets  not  being  subject  to 
garnishee  process.2  So  where  receivers  are  appointed  over 
an  insolvent  corporation,  they  are  not  liable  to  garnishee 
process,  since  the  property  which  they  hold  is  entrusted  to 
them,  not  by  act  of  the  party,  but  by  operation  of  law.3 
The  court  of  equity  being  the  actual  custodian  of  the  prop- 
erty or  fund  in  litigation,  it  will  not  }neld  its  jurisdiction 
to  a  court  of  law  and  permit  the  right  to  the  property  to 
be  there  tried.  In  other  words,  since  the  receiver's  posses- 
sion is  that  of  the  court,  it  will  not  permit  itself  to  become 
a  suitor  in  another  forum  concerning  the  property  in  ques- 
tion. And  an  additional  reason  for  holding  the  receiver 
not  subject  to  process  of  garnishment  is,  that  such  liability, 
if  recognized,  would  defeat  the  very  ends  for  which  he  was 
appointed,  since  a  judgment  at  law  upon  the  garnishment 

to  take  possession  of  property  of  operating    a    railroad    within   the 

which  he  has  been  appointed  re-  state,  are  subject  to  garnishee  proc- 

ceiver  being  unquestioned."  ess  when  such  proceeding  does  not 

1  Field  v.  Jones,  11  Ga.,  413 ;  Tay-  tend  to  disturb  the  rights  of  the  re- 

lor  v.  Gillean,  23  Tex.,  508;  Rich-  ceivers  under  the  general  orders  of 

ards  v.  People,  81  111.,  551;  Blake  the  court  by  which  they  were  ap- 

Crusher    Co.    v.    New    Haven,   46  pointed.      Phelan    v.     Ganebin.    5 

Conn.,    473;    Cooke    v.    Town    of  Col.,  14.     And  in  such   case  it  is 

Orange,   48  Conn.,  401;  Common-  held  that  the  garnishee  process  may 

wealth  v.  Hide  &  Leather  Insur-  be  properly  served  upon  the  agent 

ance  Co.,  119  Mass.,  155.    See,  also,  of  the  receivers  within  the  state,  in 

Columbian  Book  Co.  v.  De  Golyer,  like   manner  as  service  upon  the 

115  Mass.,  67;  Smith  v.  McNamara,  agent    of    a    foreign    corporation. 

15  Hun,  447.     Notwithstanding  the  Phelan    v.    Ganebin,    5    Col.,    14; 

doctrine  of  the  text  is  well  estab-  Ganebin  v.  Phelan,  5  Col.,  83. 

lished,  both  upon  principle  and  au-  2  Taylor  v.  Gillean,  23  Tex.,  508. 

thority,  it  is  held  in  Colorado  that  3  Columbian     Book     Co.     v.    De 

receivers  over  a  railway  company,  Golyer,  115  Mass.,  67.     See,  also, 

appointed   beyond   the   state   but  Richards  v.  People,  81  HI.,  551. 


128 


RECEIVERS. 


[chap.  VI. 


would,  if  recognized  and  sustained,  entirely  divest  the  juris- 
diction of  equity.1  In  Maryland,  however,  it  has  been  held 
that  an  indebtedness  due  to  the  defendant,  over  whose  effects 
receivers  have  been  appointed,  is  subject  to  garnishment  at 
any  time  before  the  receivers  have  taken  possession.2  This 
ruling,  however,  is  plainly  inconsistent  with  the  doctrine  of 
the  courts  of  New  York,  that  the  receiver's  title  and  right 
to  possession  vest  by  relation  back  to  the  date  of  the  origi- 
nal order  for  his  appointment,  although  the  proceedings  may 
not  be  perfected  until  a  later  date.3 

§  152.  As  regards  the  right  of  possession  Avhen  two  dif- 
ferent receivers  have  been  appointed,  in  different  proceed- 
ings, over  the  same  fund  or  estate,  the  question  of  priority 
or  precedence  must  be  determined  with  reference  to  the  date 
of  appointment,  since  the  courts  will  not  permit  both  to 
act,  the  title  of  the  one  being  necessarily  exclusive  of  that 
of  the  other.4  And  in  such  case,  where  an  order  of  refer- 
ence has  been  made  to  appoint,  the  receiver  appointed  under 
the  first  order  of  reference  will  be  entitled  to  possession,  the 
appointment  being  regarded  as  dating  back  by  relation  to 
the  date  of  the  order  of  reference;  and  the  appointment 
under  proceedings  begun  of  a  later  date  will  be  treated  as 
having  been  improvidently  made,  and  the  receiver  under  the 
first  order  will  be  allowed  precedence.5  When  both  appoint- 
ments have  been  made  on  one  and  the  same  day,  the  court 
may  and  will  inquire  into  fractions  of  the  day  in  determin- 
ing the  question  of  priority,  and  that  one  Avhose  appoint- 
ment is  of  an  earlier  hour  will  be  given  priority.  And  the 
question  of  precedence  being  determined  adversely  to  the 
receiver  in  actual  possession  of  the  assets,  he  will  be  re- 
quired to  surrender  possession  to  the  other.0     In  no  event 


i  Field  v.  Jones,  11  Ga.,  413. 
-  Farmers  Bank  v.  Beaston,  7  G. 
&  J.,  421. 

3  See  Rutter  v.  Tallis,  5  Sandf., 
G10;  Steele  v.  Sturges,  5  Ab.  Pi\, 
442. 

4  People  v.  Central  City  Bank,  53 


Barb.,  412;  S.  C,  35  How.  Pr.,  428; 
Deming  v.  New  York  Marble  Co., 
12  Ab.  Pr.,  GO. 

5  Deming  v.  New  York  Marble 
Co.,  12  Ab.  Pr.,  66. 

(i  People  v.  Central  City  Bank,  53 
Barb.,  412;  S.  C,  35  How.  Pr.,  428. 


c:iap.  vi.]  possession.  129 

will  a  receiver  appointed  in  the  subsequent  action  be  justi- 
fied in  interfering  with  the  possession  already  acquired  b}r 
the  former  receiver,  without  some  order  or  direction  of  the 
court.1 

§  153.  As  between  the  right  of  possession  of  a  receiver 
and  of  assignees  of  the  same  estate  under  subsequent  pro- 
ceedings in  bankruptcy,  the  doctrine  of  the  English  Chan- 
cery is,  that  the  appointment  of  the  receiver  will  not  be 
superseded  nor  his  possession  defeated  by  the  bankrupt  pro- 
ceedings. The  appointment  of  the  receiver  is  regarded 
as  a  discretionary  power,  exercised  by  the  court  of  chancery 
with  as  great  utility  as  any  power  belonging  to  it,  and  the 
receiver  first  appointed  by  that  court  is  entitled  to  posses- 
sion, and  the  assignees  in  bankruptcy  and  all  others  will  be 
required  to  surrender  possession  to  him.2 

§  154.  While  the  appointment  of  a  receiver  over  real 
property  does  not  interfere  with  the  exercise  of  rights  of 
common  then  actually  enjoyed  by  other  parties,  yet  if  the 
receiver  has  taken  possession  the  court  will  not,  as  against 
such  possession,  permit  the  exercise  of  an  alleged  right  of 
common  which  had  been  abandoned  for  several  years.  And 
in  such  a  case,  where  the  person  claiming  the  right  of  com- 

1  Ward  v.  Swift,  6  Hare,  309.  judgment  creditor,  to  be  sure,  has 

2  Skip  v.  Harwood,  3  Atk.,  564.  no  preference  under  commissions 
This  was  an  action  by  one  partner,  of  bankruptcy,  though  execution 
after  a  dissolution,  for  an  account  has  been  taken  out,  if  not  actually 
and  a  receiver  of  the  partnership  executed;  but  then  a  commission 
assets.  Subsequent  to  the  appoint-  of  bankruptcy  can  not  supersede  a 
ment  of  the  receiver,  one  member  decree  of  this  court  for  a  receiver, 
of  the  firm  was  adjudicated  a  bank-  which  is  of  a  different  considera- 
rupt,  and  his  assignees  obtained  tion,  and  is  a  discretionary  power 
possession  of  a  portion  of  the  firm  exercised  by  this  court  with  as  great 
assets,  which  the  bankrupt  had  utility  to  the  subject  as  any  sort  of 
clandestinely  conveyed  away  from  authority  that  belongs  to  it,  and  is 
the  receiver.  The  assignees  insisted  provisional  only  for  the  more  speed y 
that  they  were  entitled  to  posses-  getting  in  of  a  party's  estate,  and 
sion,  and  that  the  partner  who  had  securing  it  for  the  benefit  of  such 
obtained  the  receiver  must  come  in  person  who  shall  appear  to  be  en- 
and  share  pari  passu  with  the  cred-  titled,  and  does  not  at  all  affect  the 
itors.     Lord  Hardwicke  said :     "A  i-ight." 

9 


130  RECEIVERS.  [CHAP.  VI. 

nion  bad  turned  his  cattle  into  a  part  of  the  estate,  and  the 
receiver  had  impounded  them,  but  he  persisted  in  the  tres- 
pass and  brought  an  action  of  replevin  for  the  cattle,  he 
was  enjoined  from  further  trespassing  upon  the  property, 
and  from  further  prosecuting  his  action  of  replevin,  but 
was  given  leave  to  go  before  a  master  and  be  examined,  pro 
interesse  suo,  as  to  the  right  claimed.1 

§  155.  Where  a  person  doing  business  as  an  auctioneer  is 
in  the  habit  of  depositing  the  proceeds  of  sales  made  by 
him,  in  the  course  of  his  business,  in  bank  to  his  own  credit, 
and  in  his  own  name,  and  a  customer  of  the  auctioneer, 
familiar  with  this  method  of  doing  business,  has  permitted 
the  auctioneer  to  deposit  money  arising  from  the  sale  of  his 
goods,  with  his  own  funds  in  bank,  without  objecting 
thereto,  as  against  such  a  customer  the  receiver  of  the  auc- 
tioneer is  entitled  to  the  whole  fund  in  bank,  which  becomes 
vested  in  him  by  virtue  of  his  appointment,  and  the  cus- 
tomer becomes  merely  a  general  creditor  of  the  auctioneer.2 

§  156.  With  reference  to  the  right  of  a  landlord  to  dis- 
train for  rent  due  from  a  defendant,  upon  goods  of  the 
defendant  which  have  passed  into  the  possession  of  his  re- 
ceiver, it  is  held,  where  the  property  is  actually  removed 
by  the  receiver  from  the  demised  premises  before  the  land- 
lord attempts  to  exercise  his  right  of  distraint,  that  the 
landlord's  right  has  terminated  with  the  removal  of  the 
goods.  In  such  a  case,  therefore,  if  the  receiver  has  done 
no  act  to  indicate  his  acceptance  of  the  lease,  the  landlord 
has  no  right  to  follow  the  goods,  which  belong  to  the  re- 
ceiver and  are  not  the  property  of  the  defendant  at  the 
time  of  their  removal.3 

§  157.  A  receiver  appointed  to  sell  the  property  of  a  de- 
cedent, pending  litigation  concerning  the  administration  of 
his  estate,  is  not  entitled  to  possession  of  a  fund  held  by  a 
creditor  of  the  deceased  as  security  for  certain  liabilities  of 
the  holder  as  an  indorser  for  the  deceased.     The  holder  of 

i  Johnes  v.  Claughton,  Jac,  573.        3  Martin  v.  Black,  9  Paige,  641. 
2  Levy  v.  Cavanagh,  2  Bosw.,  100. 


CHAP.  VI.]  POSSESSION.  131 

such  a  fund,  having  acquired  a  legal  title  thereto  by  agree- 
ment with  the  deceased,  will  not  be  compelled  to  surrender 
his  title  to  a  receiver,  especially  when  it  is  not  shown  that 
the  fund  is  in  any  danger.1 

§  158.  "Where,  pending  litigation  concerning  a  block  of 
real  estate  and  certain  mills  situated  thereon,  a  receiver  is 
appointed  with  power  to  take  charge  of  the  property  and  to 
perform  all  other  duties  pertaining  to  his  office,  the  receiver 
is  entitled  to  the  possession  of  and  to  collect  the  wharfage 
due  from  a  wharf  or  landing  upon  a  river  in  front  of  the 
mills,  which  was  constructed  for  the  purpose  of  more  con- 
veniently conducting  the  business  of  the  mills,  the  whole 
constituting  in  effect  one  property,  and  the  receiver  holding 
and  renting  it  for  the  benefit  of  all  parties  interested  in 
the  litigation.  And  being  thus  entitled  to  possession,  he 
may  maintain  a  bill  for  an  injunction  against  the  authori- 
ties of  a  municipal  corporation,  who  interfere  with  his  pos- 
session and  attempt  to  collect  the  wharfage.2 

§  159.  It  is  to  be  observed  as  regards  the  possession  of 
commercial  paper  by  a  receiver,  which  has  come  into  his 
hands  from  the  defendant  by  virtue  of  his  appointment, 
that  he  acquires  his  title  thereto  by  legal  process,  and  not 
in  the  regular  course  of  dealing  in  commercial  paper.  He 
does  not,  therefore,  stand  in  the  situation  of  a  bona  fide 
holder  for  value  of  such  paper.3 

§  160.  The  effect  of  taking  property  from  a  defendant, 
and  putting  it  into  the  possession  of  a  receiver,  would  seem 
to  be  to  relieve  the  defendant  from  any  further  responsi- 
bility concerning  the  property.  And  where,  upon  a  bill  to 
recover  certain  property  consisting  of  slaves,  a  receiver  is 

1  Brady  v.  Furlow,  22  Ga,,  613.  and  keep  possession  of  property,  to 

2  Grant  v.  City  of  Davenport,  18  collect  debts,  to  receive  the  rents 
Iowa,  179.  It  is  to  be  observed  that  and  profits  on  real  property,  and 
the  statutes  of  Iowa  provide  with  generally  to  do  such  acts,  in  respect 
reference  to  the  powers  of  receivers,  to  the  property  committed  to  him, 
as  follows:  " subject  to  the  control  as  the  court  may  authorize." 

of  the  court,  a  receiver  has  power       3Briggs     v.    Merrill,    58    Barb., 
to  bring  and  defend  actions,  to  take    389. 


132  RECEIVERS.  [CHAP.  VI. 

appointed  and  the  slaves  are  placed  in  his  possession,  in  ac- 
cordance with  the  prayer  of  the  bill,  the  defendant  from 
whom  they  are  taken  will  not  be  held  liable  for  their  value, 
if  they  are  afterwards  emancipated  by  the  act  of  the  people. 
The  property,  in  such  case,  being  put  into  the  receiver's 
possession  is  regarded  as  being  in  custodia  legis,  thereby 
divesting  defendant  of  all  control  over  it.1 

§  161.  After  the  title  to  property  has  become  vested  in 
a  receiver,  by  virtue  of  the  order  appointing  him,  it  can  not 
be  divested  merely  upon  the  order  of  the  court  made  in  a 
proceeding  to  which  he  was  not  a  party.2  And  where, 
pending  litigation,  property  is  placed  in  the  hands  of  a  re- 
ceiver, who  is  vested  with  the  usual  powers  of  such  officers, 
and  the  defendants  to  the  litigation  pray  an  appeal  from  the 
final  decree  of  the  court  below,  the  effect  of  the  appeal  and 
giving  bond  thereon  is  not  such  as  to  warrant  the  court  in 
granting1  an  order  against  the  receiver,  to  turn  over  the 
property  and  money  in  his  hands,  and  he  will  still  be  allowed 
to  retain  possession,  notwithstanding  the  appeal.3 

§  162.  Where  property  has  been  in  a  receiver's  possession 
pending  litigation,  and  a  final  decree  is  made  directing  that 
a  sufficient  portion  be  set  aside  to  satisfy  the  plaintiff's  de- 
mand, which  is  accordingly  done  pursuant  to  the  decree, 
the  property  thus  set  aside  becomes  that  of  the  plaintiff,  al- 
though he  may  refuse  to  receive  it.  And  it  would  seem,  on 
such  a  state  of  facts,  that  the  receiver,  having  ceased  to  act 
in  that  capacity,  holds  the  property  thenceforth  only  as 
trustee  of  the  person  entitled  thereto  under  the  final  de- 
cree.4 And  when  the  decision  of  a  court  of  last  resort  dis- 
solves an  injunction  against  the  defendant  and  discharges  a 
receiver  of  the  fund  in  litigation,  so  that  defendant  be- 
comes entitled  to  the  possession  of  his  property,  but  he  has, 
pendente  lite,  applied  for  the  benefit  of  the  state  insolvent 
laws,  his  trustee  under  such  proceedings  becomes  entitled 
to  possession  of  the  property,  and  the  receiver  will  be  re- 

i  Lee  v.  Cone,  4  Cold.,  392.  3  Schenk  v.  Peay,  1  Dill.,  267. 

2  Rogers  v.  Corning,  44  Barb.,  229.        i  Very  v.  Watkins,  23  How.,  469. 


CHAP.  VI.]  POSSESSION.  133 

quired  to  deliver  it  to  such  trustee.1  And  when  the  appoint- 
ment of  a  receiver  is  reversed,  as  having  been  illegal  and 
unauthorized,  the  court  will  require  him  to  restore  the  fund 
to  the  person  from  whom  it  was  obtained.2 

§  162  a.  While  the  powers  and  functions  of  a  receiver  are 
co-extensive  only  with  the  jurisdiction  of  the  court  appoint- 
ing him,  yet  if  he  has  rightfully  obtained  possession  of 
personal  property  situated  within  the  jurisdiction  of  his  ap- 
pointment, and  in  the  discharge  of  his  duties  he  takes  the 
property  into  another  state,  his  title  and  right  of  possession 
are  not  thereby  divested.  And  in  such  case,  an  attachment 
will  not  be  sustained  against  the  property  in  the  latter  state 
in  behalf  of  creditors  resident  there.3 

i  Glenn  v.  Gill,  2  Md.,  1.  3  q,  M.  &  St.  P.  R.  Co.  v.  Packet 

2  0'Mahoney  v.  Belmont,   62  N.     Co.,  108  HI.,  317. 
Y.,  133,  affirming  S.  C,  37  N.  Y. 
Supr.  Ct.  R,  380. 


134 


RECEIVERS. 


[CHAP.  VI. 


II.  Interference  with  Receiver's  Possession. 

§  163.     Interference  a  contempt  of  court ;  punished  accordingly ;  illus- 
trations ;  distraint  for  rent. 

164.  The  doctrine  further  considered;  interference  by  another  re- 

ceiver. 

165.  liability  for  disturbing  receiver's  possession  not  dependent  upon 

legality  of  appointment. 

166.  Not  necessary  that  person  should  be  officially  apprised  of  receiv- 

ership. 

167.  Interference  with  collection  of  rents  by  receiver. 

168.  Surrender  of  property  by  defendant  to  receiver;  surrender  by 

purchaser. 

169.  Court  itself  must  decide  as  to  compliance  with  its  order,  and  as 

to  attachment  for  contempt. 

170.  Contempt  for  interference  with  receivership  in  foreign  country. 

171.  Actual  interference  necessary  to  contempt;   levy  and  sale  by 

sheriff  under  execution. 

172.  Receiver's  title  not  determined  in  proceedings  for  contempt; 

payment  for  property  as  reparation. 

173.  Contest  between  different  receivers. 

174.  Receiver  liable  to  attachment  for  not  turning  over  property  as 

directed  by  court. 
174  a.  Receiver  of  corporation  entitled  to  rights  under  patent. 

§  163.  The  receiver  being  an  officer  of  the  court,  and  his 
possession  being  regarded  as  the  possession  of  the  court, 
any  unauthorized  interference  therewith,  whether  by  taking 
forcible  possession  of  the  property  committed  to  his  charge, 
or  by  legal  proceedings  for  that  purpose  without  the  sanc- 
tion of  the  court  from  which  he  derives  his  appointment,  is 
regarded  as  a  contempt  of  court,  and  is  punished  accord- 
ingly, the  usual  punishment  to  which  resort  is  had  being 
by  attachment  for  contempt.1     Thus,  where  an  officer  lev- 


1  Noe  v.  Gibson,  7  Paige,  513;  De 
Visserv.  Blackstone,  6  Blatchf . ,  235 ; 
Lane  v.  Sterne,  3  Gif.,  629;  Skip  v. 
liar  wood,  3  Atk.,  564;  Hull  v. 
Thomas,  3  Edw.  Ch.,  236;  Anony- 
mous^ Mol.,499;  Broad  ■y.Wickham, 
4  Sim.,  511 ;  Russell  v.  East  Anglian 
R,  Co.,  3  Mac.  &  G.,  104;  Langford 


v.  Langford,  5  L.  J.,  N.  S.  Ch.,  60; 
Vermont  &  Canada  R.  Co.  v.  Ver- 
mont Central  R.  Co.,  46  Vt.,  792; 
Spinning  v.  Ohio  Life  Insurance 
and  Trust  Co.,  2  Disney,  368 ;  Chafee 
v.  Quidnick  Co.,  13  R.  I.,  442;  Secor 
v.  T.,  P.  &  W.  R.  Co.,  7  Biss.,  513; 
King  v.  O.  &  M.  R.  Co.,  7  Biss.,  529. 


CHAP.  VI.]  POSSESSION.  135 

ies  an  execution  upon  property  of  defendants,  which  has 
already  passed  into  the  hands  of  a  receiver,  who  distinctly 
notifies  the  officer  in  writing  at  the  time  of  making  his  levy 
that  such  property  is  in  his  possession  in  his  capacity  of  re- 
ceiver, the  officer  is  guilty  of  a  contempt  of  court  if  he  pro- 
ceeds with  the  levy.1  So  a  landlord  will  not  be  permitted 
to  take  property  from  a  receiver's  possession,  under  a  dis- 
traint for  rent  due  from  defendant  in  the  action  in  which 
the  receiver  was  appointed,  his  proper  course  being  to  apply 
to  the  court,  upon  notice  to  the  receiver,  for  an  order  re- 
quiring him  to  pay  the  rent,  or  that  the  landlord  be  at 
liberty  to  proceed  by  distraint,  or  otherwise,  as  the  court 
may  direct.  And  where,  without  such  authority  or  sanction 
of  the  court,  the  landlord  seizes  the  property  under  a  dis- 
tress warrant,  both  he  and  his  officer  levying  the  warrant 
will  be  punished  by  attachment  for  contempt  of  court.2 

§  164.  The  doctrine  that  an  unauthorized  interference 
with  a  receiver's  possession  constitutes  a  contempt  of  court 
necessarily  results  from  the  receiver's  position  as  an  officer 
of  the  court,  acting  under  its  authority  and  in  all  things 
subject  to  its  control.  Any  unauthorized  attempt  to  inter- 
fere with  or  to  disturb  his  possession  directly  questions  the 
power  of  the  court  appointing  him,  and  it  becomes  the  duty 
of  the  court  to  protect  him,  the  same  rule  being  applicable 
which  obtains  when  sheriffs,  trustees  or  masters  in  chancery 
have  been  invested  under  a  judicial  order  with  the  control 
of  property  pendente  lite.  In  all  such  cases,  the  power  to 
protect  the  receiver  or  officer  of  the  court  necessarily  fol- 
lows from  the  power  to  appoint,  and  the  court  will  extend 
its  protection  by  punishing  as  for  a  contempt  any  unauthor- 
ized interference  with  the  possession,  even  though  it  be  by 
{mother  receiver  subsequently  appointed  by  another  court, 

!Lane  v.  Sterne,  3  Gif.,  629.     It  but  that  the  court  uniformly  re- 
is  said  in  tliis  case,  that  the  prac-  quires  the  offending  party  to  pay 
tice  in  the  English  Court  of  Chan-  the  costs  and  expenses  occasioned 
eery  in  such  cases  is  not  to  punish  by  his  improper  conduct, 
the  offense  ordinarily  by  committal,  2Noe  v.  Gibson,  7  Paige,  513. 


136 


EECEIVEKS. 


[CHAP.  VI. 


which  had  subsequently  acquired  jurisdiction  over  the  mat- 
ter.1 Nor  can  such  interference  be  justified  by  the  fact 
that  it  is  committed  beyond  the  jurisdiction  of  the  court  and 
in  another  state,  as  by  instituting  attachment  proceedings 
in  another  state  and  garnishing  funds  due  to  the  receiver. 
And  an  attorney  who  appears  for  and  consents  to  the  ap- 
pointment of  a  receiver  over  a  corporation  and  assists  in 
framing  the  order,  and  who  then  attaches  the  funds  of  the 
corporation  in  another  state  to  recover  for  professional  serv- 
ices, is  guilty  of  a  plain  contempt  of  court,  and  will  be  dealt 
with  accordingly.2  And  so  jealous  are  courts  of  equity  in 
protecting  the  rights  of  their  receivers,  that  they  mil  not 
sanction  any  unauthorized  interference  with  property  or 
funds  to  which  the  receiver  is  entitled,  even  though  not  yet 
reduced  to  possession.3  Thus,  one  who,  with  full  knowledge 
of  the  appointment  of  a  receiver,  attempts  by  garnishee 
proceedings  to  reach  credits  which  are  due  to  the  receiver, 
but  of  which  he  has  not  yet  obtained  possession,  will  be 
punished  for  contempt  of  court.4 

§  165.  The  liability  of  one  who  disturbs  the  possession 
of  a  receiver,  like  that  of  a  defendant  in  violating  an  in- 
junction,5 is  not  dependent  upon  the  regularity  or  legality 
of  the  appointment,  and  it  affords  no  justification  for  an 
unauthorized  interference  with  the  receiver's  possession  that 
the  appointment  may  have  been  illegally  or  improvidently 
made.  While  the  order  continues  in  existence,  the  court  re- 
quires that  it  shall  receive  implicit  obedience,  and  will  not 
permit  its  legality  to  be  questioned  by  disobedience,  the 
court  itself  being  always  open  to  any  proper  application 
calling  in  question  the  legality  or  propriety  of  its  order.    If, 


1  Spinning  v.  Ohio  Life  Insurance 
and  Trust  Co.,  2  Disney,  368. 

2Chafee  v.  Quidnick  Co.,  13  E. 
I.,  442. 

-Richards  v.  People,  81  111.,  551; 
Hazelrigg  v.  Bronaugh,  78  Ky., 
62. 

*  Richards  v.  People,  81  111.,  551. 


5  See  for  a  discussion  of  this  prin- 
ciple in  cases  of  injunctions,  Moat 
v.  Holbein,  2  Edw.  Ch.,  188 ;  Wood- 
ward i\  Earl  of  Lincoln,  3  Swans., 
626;  Richards  v.  West,  2  Green 
Ch.,  456;  People  v.  Sturtevant,  9 
N.  Y.,  263;  Sullivan  v.  Judah,  4 
Paige,  444. 


CIIAP.  VI.] 


tossessiox. 


137 


therefore,  a  sheriff  has  levied  executions  upon  property  in  the 
custody  of  a  receiver,  the  officer  making  the  levy  being  fully 
notified  and  apprised  of  the  receiver's  appointment  and  pos- 
session, upon  a  motion  to  commit  for  contempt  of  court,  the 
respondent  can  not  justify  his  interference  upon  the  ground 
that  the  appointment  was  improperly  made,  and  rhe  court 
will  not,  upon  such  a  motion,  consider  the  merits  of  the 
orio-inal  order.1     And  in  proceedings  for  contempt  for  inter- 


1  Russell  v.  East  Anglian  R.  Co., 
3  Mac.  &  G.,  104.  This  was  an  ap- 
peal from  an  order  of  the  Vice- 
Chancellor  upon  a  motion  to  com- 
mit a  sheriff  and  under  sheriff  for 
an  alleged  contempt  of  court,  in 
having  interfered  with  the  posses- 
sion of  a  receiver  by  levying  upon 
and  taking  from  him  certain  goods 
and  chattels  under  a  fi.  fa.,  in  favor 
of  judgment  creditors  of  the  de- 
fendants. Lord  Truro  observes, 
p.  115 :  "  When  the  motion  to  com- 
mit was  made  the  answer  given  to 
it  was  that,  although  the  receiver, 
at  the  time  of  the  levy,  gave  no- 
tice that  he  was  in  possession  of 
the  property  as  an  officer  of  the 
court  of  chancery,  yet  that  the 
plaintiffs  in  the  execution  consid- 
ered the  order,  under  which  the 
receiver  was  appointed,  an  ill- 
advised,  illegal  and  indiscreet  order, 
and  that  therefore  they  were  justi- 
fied in  treating  it  as  a  nullity.  It 
was  contended  on  the  other  side, 
that  it  was  wholly  irrelevant  to  the 
application  whether  the  order  was 
or  was  not  such  an  order  as  this 
court  on  further  consideration 
would  deem  it  right  to  have  made ; 
that  it  was  a  subsisting  order ;  that 
the  officer  was  acting  under  it  when 
he  was  interrupted  by  the  sheriff ; 
that  an  officer  so  acting  under  the 
authority  of  the  court  was  entitled 


to  the  protection  of  the  court ;  that 
if  the  order  was  incorrect  in  a  de- 
gree which  interfered  with  the 
legal  rights  of  the  plaintiffs  in  the 
execution,  it  was  open  to  them  to 
come  to  the  court  to  question  the 
propriety  of  that  order  in  a  proper 
manner,  but  that  it  was  not  open 
to  them  to  do  so  by  disobeying  it. 
and  by  interrupting  the  officer  of 
the  court.  The  cnse  was  discusse  1 
at  considerable  length,  and  the  Vice- 
Chancellor  appears  to  have  enter- 
tained doubts,  which  I  think  were 
well  founded,  with  regard  to  that 
order ;  but  he  stated,  and  it  appears 
to  me  correctly,  that  that  was  not 
the  occasion  on  which  the  court 
could  be  properly  called  upon  to 
decide  on  the  validity  of  the  objec- 
tion to  the  order,  and  he  therefore 
declined  to  express  any  determi- 
nate opinion  upon  that  subject,  in- 
timating that  they  might  be  proper 
matters  to  be  discussed  hereafter. 
I  have  looked  with  care 
through  the  very  numerous  author- 
ities that  have  been  cited,  but  it  is 
not  necessary  for  me  to  go  through 
them.  The  result  appears  to  be 
this :  that  it  is  an  established  rule 
of  this  court,  that  it  is  not  open  to 
any  party  to  question  the  orders  of 
this  court,  or  any  process  issued 
under  the  authority  of  this  court, 
bv  disobedience.    I  know  of  no  act 


13S 


RECEIVERS. 


[CHAP.  VI. 


f  ering  with  a  receiver's  possession,  the  court  will  not  consider 
whether  the  order  appointing  the  receiver  was  erroneous, 
since  such  order  can  not  be  assailed  in  a  collateral  proceed- 
ing, if  the  court  had  jurisdiction  of  the  parties  and  of  the 
subject-matter.1 

§  166.  It  is  also  a  well-established  principle,  that  to  ren- 
der a  defendant  or  other  person  liable  by  attachment  for 
contempt  in  disturbing  or  interfering  with  property  of  which 
a  receiver  is  entitled  to  possession,  it  is  not  necessary  that 
he  should  be  officially  apprised  of  the  receiver's  appoint- 
ment, or  even  that  the  formal  order  should  have  been  actu- 
ally drawn,  provided  he  has  actual  notice  of  the  receivership, 
or  of  the  order  of  court  directing  the  appointment.  Any 
actual  knowledge  of  the  granting  of  the  order  is  sufficient 
to  fix  defendant's  responsibility  for  its  violation,  the  same 
principle  being  applicable  in  such  cases  as  in  case  of  the 
violation  of  an  injunction.2  Thus,  where  defendants  have 
knowledge  of  the  granting  of  an  injunction  against  their 
disposal  of  certain  property,  and  the  appointment  of  a  re- 
ceiver over  the  property,  they  are  in  contempt  of  court  if 
they  dispose  of  it,  even  though  the  order  of  the  court  is  not 


which  this  court  may  do,  which 
may  not  be  questioned  in  a  proper 
form,  and  on  a  proper  application ; 
but  I  am  of  opinion  that  it  is  not 
competent  for  any  one  to  interfere 
with  the  possession  of  a  receiver, 
or  to  disobey  an  injunction,  or  any 
other  order  of  the  court,  on  the 
ground  that  such  orders  were  im- 
providently  made.  Parties  must 
take  a  proper  course  to  question 
their  validity,  but  while  they  exist 
they  must  be  obeyed.  I  consider 
the  rule  to  be  of  such  importance 
to  the  interests  and  safety  of  the 
public,  and  to  the  due  administra- 
te m  of  justice,  that  it  ought  on  all 
occasions  to  be  inflexibly  main- 
tained.   I  do  not  see  how  the  court 


can  expect  its  officers  to  do  their 
duty,  if  they  do  it  under  the  peril 
of  resistance,  and  of  that  resistance 
being  justified  on  grounds  tending 
to  the  impeachment  of  the  order 
under  which  they  are  acting." 

1  Cook  v.  Citizens  National  Bank, 
73  Ind.,  256;  Eichards  v.  People, 
81  111.,  551. 

-'Hull  v.  Thomas,  3  Edw.  Ch., 
236;  Skip  v.  Harwood,  3  Atk.,  564; 
Lewis  v.  Singleton,  61  Ga.,  164. 
And  see  the  same  doctrine  discussed 
and  applied  to  the  violation  of 
injunctions,  in  Howe  v.  "Willard,  40 
Yt.,  654;  Hearn  v.  Tennant,  14 
Vcs.,  136;  McNeil  v.  Garratt,  Cr.  & 
Ph.,  98. 


CHAP.  VI.]  POSSESSION. 


139 


yet  served  upon  them.1  And  where  a  defendant  is  present 
in  court  during  the  hearing  of  a  cause,  and  knows  that  an 
order  granting  a  receiver  of  his  estates  has  been  allowed, 
although  the  decree  itself  has  not  yet  been  drawn,  he  is 
guilty  of  a  contempt  of  court  if  he  removes  a  portion  of  the 
property  and  puts  it  beyond  the  receiver's  possession  for 
the  purpose  of  evading  the  decree,  and  he  can  not  justify  on 
the  ground  that  the  decree  has  not  yet  been  entered.2 

§  1G7.  When  a  receiver  is  appointed  to  collect  rents,  it 
is  his  duty,  upon  being  apprised  by  the  tenants  of  interfer- 
ence with  the  rents  by  defendant,  to  move  the  court  for  an 
attachment  against  defendant,  and  the  receiver's  affidavit 
upon  information  and  belief  is  sufficient  foundation  for  the 
proceedings  in  attachment.3  And  when  a  person  has  taken 
forcible  possession  of  estates  over  which  a  receiver  has  been 
appointed,  an  order  for  his  commitment  may  be  made,  upon 
proof  of  service  of  notice  of  the  motion,  without  a  rule 
nisi  being  first  obtained.4  But  when  a  receiver  was  ap- 
pointed over  mortgaged  premises,  pending  an  action  to 
foreclose  the  mortgage,  and  a  third  person  not  a  party  to 
the  action  had  collected  the  rents,  under  an  assignment 
thereof  from  the  owner  of  the  equity  of  redemption  made 

1  Hull  v.  Thomas,  3  Edw.  Ch.,  236.  was  pronounced  in  court,  if  he  does 
-Skip  v.  Harwood,  3  Atk.,  564.  any  act  that  is  a  contravention  to 
Tins  was  a  bill  between  two  part-  the  decree,  he  is  guilty  of  a  con- 
ners,  after  a  dissolution,  for  an  tempt,  and  punishable  for  it,  not- 
account  and  a  receiver.  The  de-  withstanding  the  decretal  order  is 
fendant,  Harwood,  was  present  in  not  drawn  up ;  and  there  are  sev- 
court  during  the  hearing,  which  eral  instances  of  this  kind,  or  other- 
occupied  three  days,  and  knew  of  wise  it  would  be  extremely  easy  to 
the  order  appointing  a  receiver,  elude  decrees,  some  of  which  in 
but  before  the  decree  was  drawn  or  their  nature  require  a  considerable 
entered,  he  removed  a  large  portion  length  of  time  before  tiny  can  be 
of  the  firm  assets.  Lord  Hardwicke  completely  drawn  up."  The  de- 
was  of  opinion  that,  "  where  a  per-  fendant  was  accordingly  committed 
son,  as  Mr.  Harwood  has  done,  to  the  Fleet  for  his  contempt  of 
attends  a  cause  to  which  he  is  a  court. 
defendant,  the  whole  time  of  the  s  Anonymous,  2  MoL,  499. 
hearing,  and  had  notice  of  the  4  Broad  v.  Wickham,  4  Sim., 
decree   by  being  present  when  it  511. 


140  RECEIVERS.  [CHAP.  VI. 

prior  to  the  receiver's  appointment,  he  was  held  not  liable 
as  for  a  contempt  of  court,  although  he  was  apprised  of  the 
receivership,  the  receiver  having  taken  no  steps  to  collect 
the  rent  or  to  secure  the  attornment  of  the  tenant.1  And 
when  a  third  person,  not  a  party  to  the  suit  in  which  a  re- 
ceiver is  appointed  over  an  insolvent  debtor,  claims  title  to 
certain  property,  under  a  conveyance  from  such  debtor,  it  is 
not  proper  to  determine  the  disputed  question  of  title  upon 
proceedings  for  contempt  in  collecting  the  rents  of  such 
property,  the  appropriate  proceeding  being  by  an  order 
directing  the  receiver  to  bring  an  action  to  set  aside  the 
conveyance.2 

§  168.  A  defendant,  over  whose  property  a  receiver  is  ap- 
pointed, majr  be  attached  for  contempt,  if  he  refuses  to  com- 
ply with  an  order  of  court  directing  him  to  surrender  all  his 
property,  under  oath,  to  the  receiver.3  But  where  defendant 
is  thus  ordered  to  assign  and  deliver  his  property,  under 
oath,  under  direction  of  a  master  in  chancery,  if  the  plaintiff 
seeks  an  actual  delivery  of  the  property  in  addition  to  a  legal 
assignment,  when  a  portion  of  it  is  claimed  by  a  third  person 
under  an  assignment  from  the  debtor,  he  must  first  have  the 
master  determine  what  property  is  under  defendant's  control, 
and  obtain  an  order  upon  him  to  deliver  over  such  property. 
And  until  this  is  done,  defendant  is  not  in  contempt  for  dis- 
obeying the  order  of  the  court.4  And  a  purchaser  of  prop- 
erty at  a  sheriff's  sale,  under  execution  against  a  defendant 
over  whose  effects  a  receiver  has  been  appointed,  is  not  in 
contempt  for  refusing  to  comply  with  the  order  of  a  master, 
commanding  him  to  surrender  possession  of  the  property 
to  the  receiver,  if  such  purchaser  has  not  been  made  a 
party  to  the  litigation,  and  has  had  no  opportunity  of  assert- 
ing his  rights  before  the  court.5    And  where  a  defendant 

1  Bowery  Savings  Bank  v.  Rich-  4  Cassilear  v.  Simons,  8  Paige,  273. 

ards,  6  Thomp.  &  Cook,  N.  Y.  S.  And  see  Parker  v.  Browning,  id., 

C,  59;  S.  C,  3  Hun,  366.  389. 

*  Ex  parte  Holtis,  59  Cal.,  405.  5R0beson  v.  Ford,  3  Edw.   Ch... 

s  People  v.  Rogers,  2  Paige,  103.  441. 


CHAP.  VI.]  POSSESSION.  1±~ 

has  been  ordered  by  the  court  to  deliver  certain  notes,  held 
by  him  in  trust,  to  the  receiver  previously  appointed  in  the 
action,  he  will  not  be  held  in  contempt  for  a  refusal  to  de- 
liver the  notes  to  the  plaintiff  in  the  action,  or  to  his  attor- 
ney, when  the  receiver  himself  has  not  demanded  the  notes. 
In  such  a  case,  the  defendant  has  not,  in  strictness,  refused 
to  comply  with  the  order  of  the  court,  and  can  not,  there- 
fore, be  punished  for  an  alleged  contempt  in  refusing  to 
deliver  the  notes  to  the  plaintiff.1 

§  169.  As  regards  the  power  of  punishing  a  defendant, 
by  attachment  or  otherwise,  for  a  contempt  of  court  in  re- 
fusing to  obey  an  order  to  surrender  his  property  to  the  re- 
ceiver, the  court  issuing  the  order  is  the  only  competent 
judge  as  to  the  question  of  compliance.  An  attachment, 
therefore,  for  contempt  in  such  a  case  should  be  issued  or 
withheld,  sustained,  modified  or  set  aside,  only  by  the  direct 
order  of  the  court  itself ;  and  it  is  improper  to  make  the 
issuing  of  such  attachment  dependent  upon  the  judgment 
of  a  special  commissioner,  appointed  by  the  court  to  take 
an  account  of  the  property  involved.2 

§  170.  The  power  of  a  court  of  equity  over  persons  within 
its  jurisdiction  and  subject  to  its  process,  to  appoint  a  re- 
ceiver of  their  property  situated  in  a  foreign  country,  is,  as 
has  elsewhere  been  shown,  well  established.  And  while  the 
court  may  not  have  the  means  of  sending  its  officers  into 
the  foreign  country,  to  carry  into  effect  its  orders  there,  yet 
if  a  defendant  within  the  jurisdiction  of  the  court  instructs 
his  representatives  or  agents  in  the  foreign  country  to  resist 
the  enforcement  of  the  order  for  the  receiver,  he  is  guilty 
of  resistance  to  the  mandate  of  the  court,  and  liable  to 
punishment  as  for  contempt.* 

iPanton  v.  Zebley,  19  How.  Pr.,  Chancery  there,  a  receiver  was  ap- 

394.  pointed  over  his  estates  in  Ireland. 

2Geisse  v.  Beall,  5  Wis.,  224.  The  defendant  instructed  his  solic- 

3  Langford  v.  Langford,  5 L.  J.,  N.  itor  in  Ireland  "  to  oppose,  as  far  as 

S.  Ch.,  60.     In  this  case  the  defend-  the  law  would  permit,  the  receivers 

ant  being  in  England,  and  within  of  such  rents  and  profits  from  re- 

the    jurisdiction    of    the    Court  of  ceiving    the    same.      The  solicitor 


142  RECEIVERS.  [CHAP.  VI. 

§171.  To  render  a  person  liable  to  attachment  for  con- 
tempt of  court  in  interfering  with  the  possession  of  a 
receiver,  there  must  be  an  actual  interference  with  or  dis- 
turbance of  the  possession.1  "Where,  therefore,  a  receiver  is 
in  the  actual  possession  of  defendant's  real  estate,  which  is 
subject  to  the  lien  of  a  judgment  against  the  defendant,  the 
levy  upon  and  sale  of  defendant's  interest  in  the  real  estate 
by  a  sheriff  does  not  disturb  the  receiver's  possession,  and 
is  not  a  contempt  of  court.  The  sheriff,  in  such  case,  merely 
sells  the  interest  of  the  judgment  debtor  in  the  real  estate, 
subject  to  all  just  claims  of  the  receiver  or  of  any  other 
person,  and  does  not,  therefore,  commit  a  contempt  of  court.2 
And  a  mere  formal  levy  by  the  sheriff  upon  property  con- 
structively under  the  receiver's  control  does  not  constitute 
such  a  disturbance  of  possession  as  to  render  the  sheriff 
liable  to  attachment  therefor,  when  immediately  upon  mak- 
ing the  levy  he  consents  that  the  receiver  may  take  posses- 

accordingly  notified  defendant's  means  in  this  country,  there  should 
tenants  in  Ireland  that  the  order  of  be  no  resistance  at  all ;  because  a 
the  English  Court  of  Chancery  ap-  party  is  not  justified  in  opposing  the 
pointing  a  receiver  was  of  no  effect  order  of  the  court ;  but  he  says  by 
in  Ireland,  and  that  defendant  all  lawful  means  in  Ireland ;  that  is 
would  still  enforce  payment  of  his  to  say,  because  this  court  can  not 
rents  as  before.  The  English  re-  send  its  process  into  Ireland,  there- 
ceiver  was  thus  prevented  from  re-  fore  Lord  Langford's  agent  is  to  use 
ceiving  any  rents.  Upon  motion  all  means  in  Ireland  to  oppose  the 
for  a  sequestration  against  the  de-  order  of  the  court  here.'  His  Honor 
fendant  for  the  contempt,  Lord  said  he  hoped  that  Lord  Langford 
Langdale,  Master  of  the  Rolls,  held  would  see  his  error,  and  know  that 
as  follows :  '  That  this  is  a  contempt,  he  could  not  resist  the  order  of  this 
I  have  no  doubt.  It  is  true  that  court ;  and  that  the  order  for  a  Se- 
this court  has  not  the  means  of  send-  questration  must,  therefore,  be 
ing  its  officers  to  carry  into  effect  made,  unless  his  Lordship  ceased  to 
its  orders  in  Ireland ;  but  it  has  juris-  interfere  with  the  officer  of  the 
diction  over  all  persons  in  this  coun-   court." 

try,  and  can  compel  obedience  to  its  i  Albany  City  Bank  v.  Schermer- 
orders.  The  defendant  sends  to  his  horn,  9  Paige,  372 ;  Same  v.  Same, 
solicitors  in  Ireland,  to  oppose  by  all    10  Paige,  263. 

lawful  means  the  receiver  appointed       2  Albany  City  Bank  v.  Schermer- 
by  this  court  from  receiving  the   horn,  9  Paige,  372. 
rents.    If  he  meant  by  all  lawful 


CHAP.  VI.]  POSSESSION.  3  43 

sion  of  the  interest  levied  upon  and  dispose  of  the  same, 
holding  the  proceeds  subject  to  the  order  of  the  court  by 
which  the  receiver  was  appointed.  In  such  a  case  the  pos- 
session of  the  court  is  not  disturbed,  since  the  property  is 
placed  in  the  same  situation  which  it  would  have  occupied 
had  the  receiver  in  the  first  instance  reduced  it  to  actual 
possession  and  retained  it  throughout.1  And  it  has  been 
held  that  the  fact  that  property  was  in  the  hands  of  a  re- 
ceiver would  not  prevent  the  prosecution  of  an  action  to 
establish  a  mechanic's  lien  against  the  property.2 

§  172.  In  a  proceeding  for  contempt  instituted  against  a 
claimant  of  property,  who  has  taken  it  from  the  receiver's 
possession  without  the  sanction  of  the  court,  the  court  will 
not  determine  the  question  of  the  receiver's  title  or  ultimate 
right  to  the  property,  since  this  can  only  be  tried  in  some 
action  appropriate  for  that  purpose,  to  be  instituted  against 
the  receiver.  But  when,  in  such  proceedings  for  contempt, 
the  claimant  has  taken  the  property  out  of  the  state,  and  it 
is  impossible  for  the  court  to  compel  its  restoration  to  the 
receiver,  it  is  proper  to  order  him  to  pay  the  receiver  the 
value  of  the  property  by  way  of  reparation.3 

§  173.  While  courts  of  equity  will  not  justify  any  un- 
authorized interference  with  the  possession  of  a  receiver 
regularly  appointed,  yet  as  between  two  different  receivers 
appointed  over  the  same  property  in  different  actions,  in  a 
contest  as  to  their  right  of  possession,  the  court  will  hesitate 
to  exercise  its  extreme  powers  against  the  second  receiver  by 
commitment  for  contempt  in  interfering  with  the  possession 
of  the  first,  when  the  dispute  as  to  possession  has  been  de- 
termined, and  the  only  object  of  the  application  is  to  com- 
pel payment  of  costs.4  And  where,  as  between  two  receivers 
of  the  same  property,  appointed  in  different  proceedings, 
the  question  of   priority  is  determined   adversely  to  the 

i  Albany  City  Bank  v.  Schermer-  3  In  re  Day,  34  Wis.,  638. 

horn,  10  Paige,  263.  4  Ward  v.  Swift,  6  Hare,  309 ;  S. 

2  Richardson     v.    Hickman,    32  C,  12  Jur.,  173. 
Ark.,  406. 


144  RECEIVEKS.  [CHAP.  VI. 

receiver  in  possession,  and  he  is  required  to  surrender  the 
property  to  the  other,  he  will  not  be  punished  by  attachment 
for  disobedience  to  the  order  of  court  appointing  the  other 
receiver,  when  it  is  apparent  that  he  has  acted  in  good  faith, 
under  authority  of  the  order  appointing  him,  since  he  was 
entitled  to  regard  such  order  as  valid  until  the  question  of 
priority  could  be  determined  by  a  competent  tribunal.1 

§  174.  Since  a  receiver  is  not  properly  entitled  to  an  ap- 
peal from  an  order  of  the  court  discharging  him  from  his 
trust,  not  being  a  party  in  interest,  but  merely  the  officer  or 
representative  of  the  court,  he  may  be  compelled  to  turn 
over  the  property  as  directed  by  the  order  for  his  discharge, 
notwithstanding  he  has  prayed  an  appeal  to  an  appellate 
court  and  has  tiled  an  appeal  bond.  And  if  he  refuses  to 
comply  with  such  order  as  to  the  disposition  of  the  assets, 
obedience  may  be  enforced  by  attachment.  But  the  court 
Avill  not,  under  such  circumstances,  direct  an  attachment  to 
issue  in  the  first  instance,  when  the  receiver  expressly  dis- 
claims any  intentional  disregard  of  its  authority.2 

§  174  a.  When  a  corporation  is  dissolved  and  its  property 
and  assets  are  vested  in  a  receiver,  who  is  authorized  by  the 
court  to  continue  the  business,  the  corporation  having  been 
vested  with  the  exclusive  right  to  manufacture  certain  arti- 
cles  under  letters  patent,  this  right  passes  to  the  receiver  by 
virtue  of  his  appointment.  And  in  such  case,  a  former  offi- 
cer of  the  corporation  who  engages  in  the  business  of  man- 
ufacturing the  same  articles,  even  under  a  license  from  the 
patentee,  is  guilty  of  such  an  interference  with  the  posses- 
sion and  rights  of  the  receiver,  as  to  render  him  liable  for 
contempt  of  court.3 

1  People  v.  Central  City  Bank,  -  In  re  Rachel  Colvin,  3  Md.  Ch., 
53  Barb.,  412;  S.  C,  35  How.  Pr.,     300. 

428.  3  In  re  Woven  Tape  Skirt  Co.,  12 

Hun,  111. 


CHAPTER  VII. 

OF  THE  RECEIVER'S  FUNCTIONS. 

I.  General  Nature  of  His  Functions, §  175 

II.  Sales  by  Receivers, *91 


I.  General  Nature  of  His  Functions. 

§  175.  Office  one  of  trust;  limited  discretion;  not  an  assignee;  repre- 
sents all  parties. 

176.  Discretion  in  accepting  or  rejecting  bids. 

177.  Subject  to  court  in  settlement  of  demands. 

178.  No  discretion  in  application  of  funds ;  when  not  allowed  offset. 

179.  Enlargement  of  powers  by  court;  protection  of  court. 

180.  Power  as  to  making  repairs. 

181.  Not  allowed  to  originate  action  under  English  and  Irish  prac- 

tice ;  practice  in  this  country. 
183.     Custodians  in  the  nature  of  receivers ;  same  rules  applicable. 

183.  Exemption  from  arrest  while  attending  court. 

184.  Effect  of  receivership  as  regards  statute  of  limitations. 

185.  Abatement  of  cause  does  not  determine  receiver's  functions; 

order  of  removal  necessary. 

186.  Power  of  court  over  receiver's  contract. 

187.  Relative  functions  as  between  different  receivers. 

188.  Entitled  to  advice  and  instruction  of  court ;  may  have  his  own 

counsel. 

189.  May  receive  money  not  yet  due. 

190.  Effect  on  receiver's  functions  of  appeal  and  supersedeas. 

§  175.  The  office  of  receiver  is  treated  as  one  of  confi- 
dence and  trust,  although  his  discretionary  powers  are 
limited.  As  a  rule  he  can  do  nothing  to  impair  the  fund 
in  his  hands  without  the  order  of  the  court,  and  can  make 
no  dividend  without  the  special  sanction  of  the  court,  since 
the  funds  in  his  possession  are  considered  as  in  custodia 
leg  is  for  whoever  may  ultimately  establish  a  title  thereto.' 

i  Hooper  v.  Winston,  24  111.,  353. 
10 


146  RECEIVERS.  [CHAP.  VII. 

And  a  receiver  lias  no  greater  rights  than  the  guardian  of 
a  ward's  estate,  and  is  not  an  assignee  of  the  person  over 
whose  estate  he  is  appointed,  being  simply  an  officer  of  the 
court  appointed  to  take  charge  of  the  property  pending 
litigation.1  And  it  is  necessary  to  a  proper  understanding 
of  the  functions  of  a  receiver,  and  of  the  real  nature  of  his 
office,  to  bear  in  mind  that  he  is  not  appointed  for  the  bene- 
fit merely  of  the  plaintiff  on  whose  application  the  appoint- 
ment is  made,  but  for  the  equal  benefit  of  all  persons  who 
may  establish  rights  in  the  cause,  and  that  he  is  not  the 
plaintiff's  agent,  but  is  equally  the  representative  of  all 
parties  in  his  capacity  as  an  officer  of  the  court.2  If  he  is 
empowered  by  the  court  to  continue  the  management  of  the 
business  over  which  he  is  appointed,  he  may  employ  such 
persons  as  may  be  necessary  for  this  purpose,  and  the  court 
will  not  interfere  with  his  discretion  as  regards  such  em- 
ployment unless  some  abuse  is  shown.3 

§  176.  In  the  management  of  property  entrusted  to  their 
charge  receivers  are  vested  with  a  certain  degree  of  discre- 
tion, for  which  they  are  responsible  to  the  court  appointing 
them,  and  in  the  exercise  of  which  they  are  subject  to  its 
control;  and  if  they  act  in  good  faith  and  without  preju- 
dice to  the  rights  of  the  parties  in  interest,  their  action  will 
be  sustained  by  the  court.  For  example,  when  receivers 
have  advertised  for  proposals  for  leasing  property  under 
their  control,  they  may  exercise  a  wise  discretion  in  accept- 
ing or  rejecting  bids  received,  and  are  not  bound  to  lease 
the  property  for  the  highest  price  offered,  without  regard 
to  the  bidder  or  to  the  disposition  he  may  make  of  the 
property.  And  the  advertisement  of  the  receivers,  in  such 
a  case,  does  not  constitute  such  a  contract  with  the  bidder 
as  to  compel  them  to  take  the  highest  bid,  nor  does  it 
limit  them  to  a  certain  time  within  which  to  receive  bids. 
If,  therefore,  the  receivers,  in  the  exercise  of  their  dis- 


i  King  v.  Cutts,  24  Wis.,  627.  s  Taylor  v.  Sweet,  40  Mich.,  736. 

2  Delany  v.  Mansfield,  1  Hog.,  234. 


CHAP.  VII.]  FUNCTIONS.  147 

cretion,  have  awarded  the  lease  of  the  premises  to  a  partic- 
ular bidder,  and  have  acted  prudently  in  the  matter  and  with 
regard  to  the  best  interests  of  the  trust  committed  to  their 
charge,  the  court  will  not  entertain  the  application  of 
another  bidder  to  compel  the  receivers  to  execute  a  lease  to 
him.1 

§  177.  The  power  of  courts  over  their  own  receivers,  in- 
cluding their  authority  to  control  them  in  the  settlement  of 
all  demands  against  the  property  held  by  them  in  their 
capacity  as  receivers,  is  well  established,  and  as  officers  of 
the  court  it  is  their  duty  to  obey  all  orders  of  the  court  in 
this  regard.  And  it  is  equally  the  duty  of  the  court  appoint- 
ing a  receiver  to  compel  the  settlement  of  claims  against 
the  property  in  his  possession  in  the  most  expeditious  man- 
ner, and  so  as  to  avoid  litigation  and  expense  to  the  fund  in 
charge  of  the  court.2 

§  178.  A  receiver  has  in  general  no  discretion  in  the  ap- 
plication of  funds  in  his  hands  by  virtue  of  his  receivership, 
but  holds  them  strictly  subject  to  the  order  of  the  court, 
and  to  be  disposed  of  as  the  court  may  direct.3  He  will 
usually  be  required  to  pay  over  funds  in  his  hands  to  the 
persons  who  are  ratably  entitled  thereto,  rather  than  to  in- 
vest them,  when  the  persons  entitled  are  already  ascertained, 
and  when  there  can  be  no  difficulty  in  carrying  out  the  di- 
rection of  the  court  in  this  respect.4  And  when  he  is  ordered 
to  make  any  particular  disposition  of  funds  in  his  hands, 
as,  for  example,  to  return  money  to  the  person  from  whom 
he  collected  it,  he  will  not  be  allowed  to  offset  his  own 
personal  claims  against  the  person  to  whom  he  is  directed 
to  return  the  money,  since  to  allow  this  would  render  the 
disposition  of  the  money  as  uncertain  as  before  the  receiv- 


1  Knott  v.  Receivers   of   Morris  Bowling  Green  Savings  Bank,  65 
Canal   &    Banking  Co.,    3  Green  Barb.,  275. 

Ch.,  423.  3  Johnson  v.  Gunter,  6  Bush,  534. 

2  Guardian  Savings  Institution  v.  *  Collins  v.  Case,  25  Wis.,  651. 


14:3  RECEIVERS.  [CHAP.  VII. 

ers  appointment,  and  would  thus  defeat  the  very  object  of 
his  appointment.1 

§  179.  It  frequently  happens  that  an  enlargement  of  a 
receiver's  powers  becomes  necessary  in  order  that  he  may 
properly  discharge  his  trust,  or  because  of  obstructions  or 
resistance  which  he  may  receive  in  attempting  to  perform 
his  duties.  In  such  cases  it  is  the  province  of  the  court 
which  has  appointed  him,  upon  the  facts  being  properly 
presented,  to  enlarge  his  powers  and  to  afford  him  the  nec- 
essary protection  in  the  performance  of  his  duties.2 

§  180.  Keceivers  are  not  usually  permitted,  at  their  own 
discretion,  to  apply  funds  in  their  hands  in  repairing  or 
improving  the  premises  under  their  control,  without  a  pre- 
vious application  to  the  court  and  obtaining  leave  so  to  do.3 
If,  however,  a  receiver  has  made  repairs  without  permission, 
a  reference  may  be  had  to  a  master  to  inquire  whether  they 
were  reasonable.4  And  if,  upon  reference  to  a  master,  it  is 
found  that  the  repairs  were  necessary  and  proper,  and  for  the 
lasting  benefit  and  improvement  of  the  estate,  they  may  be 
allowed  by  the  court.5  And  a  general  direction  to  a  re- 
ceiver of  landed  property  to  manage  it,  authorizes  him  to 
propose  to  the  master,  from  time  to  time,  to  make  all  ordi- 
nary repairs,  and  a  special  application  to  the  court  for  that 
purpose  is  unnecessary  in  such  case.6 

§  181.     It  seems  to  be  the  established  rule  in  England, 

1  Johnson  v.  Gunter,  6  Bush,  534.  before.     The  court  will  not  thus 

Mr.  Justice  Peters,  for  the  court,  permit  itself  to  be  made  a  quasi 

says,  p.  536 :  "  If  the  mere  agent  or  suitor." 

instrument  of  the  court  can  be  per-  2  Oliio  Turnpike  Co.  v.  Howard,  1 

mitted,  after  receiving  funds  under  Western  Law  Journal,  216. 

its  order,  to  set  up  claims  to  them  3  Blunt  v.  Clitherow,  6  Ves.,  799; 

wholly  foreign  to  the  object  of  his  Attorney-General  v.  Vigor,  11  Ves., 

appointment,  the  position  of  a  re-  563. 

ceiver  is  perverted  into  that  of  a  i  Attorney-General  v.  Vigor,  11 

speculator  in  funds,  constructively  Ves.,  563. 

at  least  in  court,  and  their  destiny  5 Blunt  v.  Clitherow,  6  Ves.,  799. 

becomes  as  uncertain  after    they  6Thornhill  v.  Thornhill,  14  Sim., 

enter  the  precincts  of  the  court  as  600. 


CHAP.  VII.J  FUNCTIONS.  149 

that  a  receiver  in  a  cause  is  not  allowed  to  originate  any 
steps  or  proceedings  therein  of  his  own  motion,  but  should 
leave  the  parties  to  the  cause  to  make  all  applications  for 
that  purpose.  The  rule,  however,  is  not  without  exception, 
and  when  the  parties  are  guilty  of  great  delay  or  laches  in 
moving,  the  receiver  is  justified  in  himself  proceeding.1 
Under  the  practice  of  the  Irish  Court  of  Chancery,  it  is  also 
held  that  a  receiver  should  not,  of  his  own  motion,  interfere 
with  the  rights  of  parties  to  the  cause  by  applications  to 
the  court,  and  that  court  has  always  manifested  an  extreme 
reluctance  to  granting  orders  upon  motions  made  by  a  re- 
ceiver himself,  upon  the  ground  that  he  should  not  assume 
to  himself  the  management  of  the  cause.2  Thus,  a  motion 
made  by  a  receiver  to  let  certain  lands  under  his  control 
has  been  refused  by  that  court,  on  the  ground  that  such  a 
motion  should  properly  come  from  the  plaintiff  in  the  cause.3 
So  it  has  been  held  that  an  application  to  the  court  for 
directions  as  to  whether  a  mortgage  on  the  lands  subject  to 
the  receivership  should  be  paid,  should  be  made  by  the 
parties  to  the  cause,  and  not  by  the  receiver.4  So,  too,  a 
motion  by  a  receiver  for  permission  to  bring  an  ejectment 
against  certain  lands  in  possession  of  one  of  the  defendants 
has  been  denied,  on  the  ground  that  it  was  not  the  proper 
function  of  the  receiver  to  carry  on  plaintiff's  cause  upon  a 
question  involving  the  relative  rights  of  the  parties.5  In 
this  country,  however,  the  courts  have  inclined  to  a  broader 
view  of  the  proper  functions  of  a  receiver,  and  it  is  believed 
that  his  right  to  apply  to  the  court  for  directions  as  to  the 
management  of  the  estate,  or  for  leave  to  institute  any 
necessary  proceedings  connected  therewith,  is  generally  rec- 
ognized by  the  courts  in  most  of  the  states. 

§  182.     "When  custodians  of  a  certain  fund  in  litigation 

1  Ireland  v.   Eade,   7  Beav.,  55;  see  Callaghan  v.  Reardon,  Sau.  & 
Parker  v.  Dunn,  8  Beav.,  497.  Sc,  682;  Clark  v.  Fisher,  id.,  684. 

2  O'Connor  v.  Malone,  1  Ir.  Eq.,        3Wrixon  v.  Vize,  5  Ir.  Eq.,  276. 
20 ;  Wrixon  v.  Vize,  5  Ir.  Eq. ,  276 ;        *  O'Connor  v.  Malone,  1  Ir.  Eq. ,  20. 
Comyn  v.  Smith,  1  Hog.,  81.     And        sconiyn  v.  Smith,  1  Hog.,  81. 


150  RECEIVERS.  [CHAP.  VII, 

occupy  the  same  relation  to  the  fund  and  to  the  court  as 
regularly  appointed  receivers,  their  functions  or  possession 
differing  only  in  name,  it  would  seem  that  they  are  to  be 
governed  as  to  their  rights  and  liabilities  by  the  same  rules 
which  govern  in  case  of  receivers.  And  it  follows,  neces- 
sarily, that  since  they  are  bound  to  obey  the  orders  of  the 
court  in  relation  to  the  fund  in  their  possession,  they  are 
entitled  to  the  protection  of  the  court  against  all  loss  by 
reason  of  disbursements  which  were  necessary  and  proper, 
and  such  as  a  reasonable  and  prudent  man,  acting  as  receiver, 
would  have  been  justified  in  incurring.1 

§  183.  Under  the  Irish  chancery  system,  a  receiver  is  ex- 
empt from  arrest  while  in  attendance  upon  the  court,  and 
when  a  receiver  was  in  attendance  upon  a  motion  made 
against  him  in  the  course  of  his  receivership,  and  was  ar- 
rested for  debt  under  a  ca.  sa.,  he  was  discharged  upon  the 
ground  that  he  was  privileged  from  arrest.2 

§  184.  The  appointment  of  a  receiver  over  an  estate  or 
property  does  not  alter  or  affect  the  rights  of  parties  as  re- 
gards the  operation  of  the  statute  of  limitations.3  And  a 
payment  made  by  a  receiver  to  one  of  the  parties  in  the 
cause,  out  of  funds  collected  by  him  in  his  receivership,  is 
not  regarded  as  a  payment  made  by  the  debtor,  to  the  extent 
of  being  an  acknowledgment  of  the  indebtedness  so  as  to 
take  the  case  out  of  the  statute  of  limitations,  since  such 
payment  is  made  by  the  receiver  in  his  official  capacity  and 
as  an  officer  of  the  court.4  But  it  has  been  held  that  the 
appointment  of  a  receiver  prevents  the  statute  of  limitations 
from  running,  at  least  in  a  court  of  equity,  in  favor  of  a 
stranger  to  the  suit.5 

§  185.     The  abatement  of  the  cause  in  which  a  receiver 


1  Adams  v.  Haskell,  6  Cal.,  475.  <Whitely    v.  Lowe,   2   DeG.   & 

ZBrabazonuTeynham,  2  Ir.  Ch.,  J.,  704,  affirming  S.  C,  25  Beav., 

N.  S.,563.  421. 

3  Harrison  v.  Dignan,  1  Con.  &  5Wrixonv.  Vize,  3  Dr.  &  War., 

Law.,  376;  Kynie  v.  Dignan,  4  Ir.  104. 

Eq.,  562. 


CHAP.  VII.]  FUNCTIONS.  151 

was  appointed  does  not  necessarily  determine  his  functions, 
and  his  authority  is  regarded  as  continuing  until  an  order 
for  his  removal.  And  until  such  order  he  may  continue  to 
take  the  necessary  steps  to  enforce  the  collection  of  rents, 
which  it  is  still  his  duty  to  receive  and  account  for.1 

§  186.  Since  a  receiver  is  an  officer  of  the  court,  and  all 
contracts  made  with  him  are  subject  to  ratification  by  the 
court,  it  has  the  undoubted  power  to  vacate  or  modify  any 
agreement  or  contract  which  the  receiver  has  made,  and  to 
direct  the  making  of  another  agreement ;  but  it  will  not  ex- 
ercise such  power  without  notice  and  without  hearing  the 
contracting  parties.2  And  since  a  receiver  has  no  power  to 
make  contracts  without  the  authority  of  the  court,  all  per- 
sons contracting  with  him  are  chargeable  with  knowledge 
of  his  functions  in  this  regard  and  contract  at  their  peril.3 

§  187.  A  receiver  may  be  appointed  to  take  charge 
2)endente  lite  of  the  fund  in  controversy,  notwithstanding  a 
receiver  has  previously  been  appointed  over  the  same  fund 
in  another  action.  But  in  such  case  the  powers  and  func- 
tions of  the  second  receiver  are  subordinate  to  those  of  the 
first,  and  he  is  only  entitled  to  custody  of  the  fund,  or  of  so 
much  as  remains  of  it,  after  the  first  receiver  has  become 
functus  officio.* 

§  188.  A  receiver  being  always  regarded  as  an  officer  of 
the  court,  and  at  all  times  subject  to  its  direction  and 
orders,  it  is  proper,  in  the  discharge  of  his  official  duties, 
that  he  should  on  suitable  occasions  apply  to  the  court  for 
instruction  and  advice ;  and  he  is  at  all  times  entitled  to 
such  advice  from  the  court,  and  should  not  hesitate  to  apply 
for  it  when  questions  of  intricacy  or  difficulty  occur.5    Such 


i  Newman  v.  Mills,  1  Hog.,  291.  N.  S.,  270;  Bailey  v.  O'Mahoney,  33 

2Mooney  v.  British  Commercial  N.  Y.  Supr.  Ct.  R.,  239. 

Life  Insurance  Co. ,  9  Ab.  Pr. ,  N.  S. ,  &  in  re  Van  Allen,  37  Barb. ,  225 ; 

103.  Smith  v.  New  York  Consolidated 

3Tripp  v.  Boardman,  49  la.,  410;  Stage  Co.,  28  How.  Pr.,  377;  S.  C, 

Ellis  v.  Little,  27  Kan.,  707.  18  Ab.  Pr.,  431;  Curtis  v.  Leavitt, 

4 Bailey  v.  Belmont,  10  Ab.  Pr.,  1  Ab.  Pr.,  274;  Lottimer  v.  Lord,  4 


152  KECEIVERS.  [CHAP.  VII. 

an  application  may  be  made  ex  parte,  although  it  is  deemed 
the  better  practice  to  give  notice  to  all  parties  in  interest 
in  the  estate  or  fund.1  And  since  the  receiver  in  a  cause  is 
not  the  representative  or  receiver  of  the  person  at  whose 
instance  he  is  appointed,  he  should  not  act  under  his  advice 
or  that  of  his  counsel,  but  in  all  cases  of  doubt,  and  espe- 
cially when  there  is  a  conflict  of  interest,  he  should  obtain 
the  direction  of  the  court;  and  he  will  be  allowed  to  and 
should  obtain  counsel  for  himself.2 

§  189.  When  a  receiver  is  appointed  pendente  lite,  and  is 
authorized  by  the  order  of  the  court  to  sue  for  and  collect 
such  debts  as  are  due  aud  may  become  due,  he  may  properly 
receive  not  only  money  which  is  actually  due,  but  money 
not  yet  due,  and  may  give  a  receipt  and  satisfaction  there- 
for.3 So  if  he  is  authorized  by  the  order  of  the  court  ap- 
pointing him  to  execute  and  acknowledge  for  record  formal 
satisfaction  of  all  real  estate  mortgages  which  come  to  his 
hands  as  receiver,  upon  payment  or  collection  by  him  of  the 
debts  which  they  were  given  to  secure,  he  may  receive  pay- 
ment of  and  discharge  a  mortgage  which  is  not  yet  due.4 

§  190.  If  an  appeal  is  taken  from  an  order  appointing  a 
receiver,  and  the  appellate  court  grants  a  supersedeas  and 
directs  the  receiver  to  undo  what  he  has  done,  and  to  restore 
to  its  original  owners  the  property  which  he  had  taken,  his 
authority  is  thereby  completely  suspended  and  rendered 
nugatory  by  operation  of  law.  And  while  the  supersedeas 
does  not  render  nugatory  or  unlawful  any  action  of  the  re- 
ceiver, had  under  the  order  of  the  court  below  before  the 
appeal  was  taken,  it  forbids  that  court  and  its  officer  from 
further  acting  in  the  matter.  The  power  of  the  court  below 
being  suspended,  the  power  of  its  officer  necessarily  becomes 

E.   D.    Smith,   191;    Cammack    v.  2Lottimerv.  Lord,  4  E.  D.  Smith, 

Johnson,  1  Green  Ch.,  163;  People  191. 

v.  Security  Life  Insurance  Co.,  79  soicott    v.    Heermans,   3    Hun. 

N.  Y.,  267.  431. 

i  Smith  v.   New    York    Consoli-  4  Heermans  v.  Clarkson,  64  N.  Y., 

dated  Stage  Co.,  28  How.  Pr.,  377;  171. 
S.  C,  18  Ab.  Pr.,  431. 


CHAP.  VII.]  FUNCTIONS.  153 

inoperative;  if,  therefore,  the  receiver  refuses  to  obey  the 
mandate  of  the  appellate  court  and  continues  to  exercise 
the  functions  of  his  office,  he  is  guilty  of  a  contempt  of 
court,  and  may  be  punished  by  imprisonment  until  he  com- 
plies with  the  order.1  But  when  by  a  final  decree  the  re- 
ceiver is  directed  to  pay  over  the  fund  in  his  hands  to 
the  person  found  to  be  entitled  thereto,  he  may  properly 
make  such  payment  before  an  appeal  from  the  decree  is  per- 
fected by  giving  a  bond  to  operate  as  a  supersedeas.  And 
m  such  case,  although  the  decree  is  finally  reversed  upon 
appeal,  the  receiver  can  not  be  again  required  to  account  for 
the  money  so  paid.2 

i  State  v.  Johnson,  13  Fla.,  83.  2Hovey  v.  McDonald,  109  U.  S., 

150. 


154  EECEIVEE3.  [CHAP.  VIL 


II.  Sales  by  Receivers. 

§  191.     Sale  subject  to  action  of  court;  does  not  divest  existing  liens. 

192.  Court  vested  with  power  of  sale  whenever  necessary;  sale  of 

steamboat. 

193.  Receiver  can  not  purchase  at  his  own  sale ;  general  rule  as  to 

trustees  applicable. 

194.  Illustrations  of  the  rule ;  purchases  in  receiver's  interest  set  aside. 

195.  Departure  from  rule  by  consent  of  parties. 

196.  Order  for  receiver's  sale  can  not  be  questioned  collaterally. 

197.  Satisfactory  evidence  required  as  to  necessity  for  sale;  order 

should  be  specific. 

198.  Discretion  as  to  sales  in  bulk  or  by  parcels ;  private  sale  on  ex 

parte  application  set  aside. 

199.  Receiver's  power  to  execute  deed ;  when  deed  should  be  made. 
199  a.  Sale  subject  to  incumbrances ;  title  of  third  person ;  partnership ; 

dower  interest. 
199  b.  Doctrine  of  caveat  emptor  applied. 

§  191.  The  functions  and  powers  of  receivers  touching 
the  sale  of  property  committed  to  their  charge,  unless  de- 
fined or  regulated  by  statute,  rest  upon  and  are  governed 
by  the  orders  of  the  court  appointing  them.  Good  faith 
and  fair  dealing  are  required  of  receivers  in  the  execution 
of  such  orders,  and  if  a  receiver  fraudulently  imposes  upon 
and  deceives  the  court  in  obtaining  an  order  of  sale,  the 
sale  may  be  vacated  and  the  parties  may  be  restored  to 
their  original  position.1  And  when,  acting  under  a  misap- 
prehension as  to  the  value  of  certain  assets,  a  receiver  sells 
them  at  a  grossly  inadequate  price,  and  upon  learning  the 
real  facts  he  refuses  to  complete  the  sale  and  to  deliver  the 
property,  the  court  may,  in  the  exercise  of  its  discretion, 
refuse  an  application  by  the  purchaser  to  compel  the  com- 
pletion of  the  sale.  Such  a  contract  of  sale,  while  it  remains 
executory,  is  subject  to  the  supervision  of  the  court,  and 
the  purchaser  will  be  presumed  to  have  purchased  subject 
to  the  implied  condition  that  the  court  may,  in  the  exercise 

iHackley  v.   Draper,  60  N.  Y.,    (N.  Y.  S.  C),  614,  2  Hun,  523. 
88,  affirming  S.  C,  4  Thomp.  &  C. 


CHAP.  VII.]  FUNCTIONS.  155 

of  a  sound  discretion,  sanction  or  disapprove  the  sale,  as  it 
shall  see  fit.1  And  since  the  appointment  of  a  receiver  does 
not  divest  existing  liens  upon  the  property  which  is  subject 
to  the  receivership,  it  follows  that  a  sale  by  a  receiver  of  a 
partnership  of  property  mortgaged  by  the  firm  gives  to  the 
purchaser  only  such  interest  as  the  firm  itself  had  in  the 
property,  and  does  not  divest  or  impair  the  paramount  mort- 
srao-e  hen  of  a  stranger  to  the  action  in  which  the  receiver 
was  appointed.2  So  when  a  corporation  over  which  a  re- 
ceiver is  appointed  has,  prior  to  such  appointment,  conveyed 
lands  to  trustees  to  secure  the  holders  of  stock  of  the  cor- 
poration, and  thereafter,  and  before  the  receiver  is  appointed, 
the  equity  of  redemption  in  such  lands  is  also  sold  under 
execution  against  the  corporation,  and  the  time  for  redemp- 
tion expires  without  redemption  being  made,  the  receiver 
takes  no  title  to  such  lands,  and  a  sale  by  him  will  convey 
no  title.3 

§  192.  A  court  of  equity  appointing  a  receiver  to  take 
possession  of  property,  pending'  a  litigation  concerning  the 
rights  of  the  parties  thereto,  is  vested  with  the  power  of 
selling  the  property  in  the  receiver's  hands,  whenever  such 
course  becomes  necessary  to  preserve  the  interests  of  all 
parties.  Thus,  in  an  action  to  determine  the  rights  of  con- 
flicting claimants  to  a  steamboat,  which  was  put  into  the 
hands  of  a  receiver  pendente  lite,  and  was  operated  under 
the  receiver's  direction  for  two  years,  the  court  upon  being 
satisfied  that  it  was  highly  inconvenient  and  unfit  to  con- 
tinue in  possession  and  operate  the  boat  for  a  longer  period, 
ordered  it  sold,  although  the  bill  on  which  the  receiver  was 
allowed  was  not  framed  for  the  purpose  of  effecting  a  sale.4 

§  193.  A  receiver  is  regarded  as  occupying  a  fiduciary 
relation,  in  the  sense  that  he  can  not  be  allowed  to  purchase 
for  his  own  benefit  property  connected  with  or  forming  a 
part  of  the  subject-matter  of  his  receivership,  or  in  his  pos- 

1  Attorney-General  v.  Continental        3  Fitch   v.   Wetherbee,   110    111., 
Life  Insurance  Co.,  94  N.  Y.,  199.    475. 
•-'Lorch  v.  Aultman,  75  Ind.,  162.        « Crane  v.  Ford,  Hopk.  Ch.,  114. 


156  RECEIVERS.  [CHAP.  VII. 

session  in  that  capacity.  The  courts  will  not  permit  him, 
any  more  than  any  other  trustee,  to  subject  himself  to  the 
temptation  arising  from  a  conflict  between  the  interest  of 
a  purchaser  and  the  duty  of  a  trustee.  And  the  rule  has 
its  foundation  in  grounds  of  public  policy,  and  in  the  pe- 
culiar relation  sustained  by  a  receiver  to  the  fund  or  estate 
in  his  custody,  which  resembles  in  this  respect  that  of  a 
solicitor,  trustee,  or  any  other  fiduciary  relation  of  a  like 
nature  where  the  same  rule  of  equity  prevails.  Unless, 
therefore,  it  clearly  appears  that  it  would  be  for  the  benefit 
of  the  parties  in  interest  to  hold  the  receiver  to  his  pur- 
chase, he  will  not  be  permitted  to  derive  any  benefit  from 
a  purchase  made  by  himself  of  property  pertaining  to  his 
receivership ;  and  whatever  purchase  he  may  make  will  be 
held  to  be  for  the  benefit  of  the  real  parties  interested, 
whose  interests  he  as  receiver  represents,  and  his  purchase 
will  be  held  voidable  at  their  election.1  And  a  court  of 
equity  will  not  ordinarily  permit  a  receiver  to  become  a 
bidder  at  a  sale  of  lands  of  which  he  has  had  the  previous 
management  as  receiver,  it  being  regarded  as  of  great  im- 
portance to  the  interests  of  suitors,  and  to  the  faithful  dis- 
charge of  their  duties  by  receivers,  that  they  should  be 
beyond  the  reach  of  all  temptation  to  compromise  those 
duties.2 

§  194.  The  general  rule  as  above  stated,  denying  receivers 
the  privilege  of  becoming  purchasers  of  property  pertaining 
to  their  trust,  is  entirely  independent  of  the  question  whether 
anjr  fraud  in  fact  has  intervened.  And  a  receiver  of  an 
insolvent  bank,  who  in  that  capacity  holds  the  equity  of 
redemption  of  certain  mortgaged  premises,  and  who  pur- 
chases the  premises  at  a  foreclosure  sale  under  the  mort- 
gage, can  not  take  any  title  or  benefit  of  such  purchase  to 

•  Jewett  v.  Miller,  10  N.  Y.,  402;  Anderson,   9  Ir.   Eq.,   23;    Tither- 

Carr  v.  Houser,  46  Ga.,  477;  Alven  ington's  Adin'r  v.  Hodge,  81  Ky., 

v.  Bond,  Flan.  &  K.,  196;  S.  C,  3  286. 

Ir.  Eq.,  365;  Eyre  v.  M'Donnell,  15  2  Anderson    v.   Anderson,   9    Ir. 

Ir.   Ch.,   N.   S.,  534;    Anderson  v.  Eq.,  23. 


CHAP.  VII.'] 


FUNCTIONS. 


157 


himself.  And  the  general  rule  applies  in  such  a  case,  not- 
withstanding the  sale  is  a  judicial  sale,  under  a  decree 
against  the  receiver,  and  based  upon  a  title  paramount  to 
his  title,  and  to  the  interest  of  his  cestui  que  trust}  And 
when  a  portion  of  the  premises  sold  under  the  decree  in 


i  Jewett  v.  Miller,  10  N.  Y.,  402. 
Johnson,     J.,     observes,     p.     404: 
"  When  Miller  purchased  the  prem- 
ises in  question  at  the  master's  sale, 
December  7,  1842,  he  was  receiver 
of  the  Wayne  County  Bank.    The 
sale  was  made  on  a  f  oreclosure  of  a 
mortgage  made  by  one  Williams, 
then  the  owner  of  the  premises,  to 
Minot  C.  Morgan  and  others,  dated 
October  15,  1838,  which  mortgage 
was  assigned  first  to  the  Wayne 
County  Bank  by  Morgan  and  oth- 
ers, and  afterward  by  the  bank  to 
the  people  of  the  state  of  New  York 
as  collateral  security  for  moneys 
borrowed   by  the  bank  from  the 
canal  fund.     After  this  last  assign- 
ment, Williams  sold  the  premises 
to  the  defendant,  Cook,  who  gave 
his    mortgage    for    the     purchase 
money,  and  this  mortgage  was  as- 
signed by  Williams  to  the  bank  as 
security  for  a  debt  due  by  him  to 
the  bank.     On  the  28th  of  August, 
1841,   as    receiver    of    the  Wayne 
County  Bank,   Miller   procured   a 
quitclaim    deed    of    the    premises 
from  Cook  and  wife.     Miller  then 
as  receiver  had  the  right  to  redeem 
the  mortgage  assigned  as  security 
to  the  state,  and  also  tho  general 
equity  of  redemption  by  the  quit- 
claim from  Cook  and  wife.     Thus 
situated  upon  the  foreclosure  by 
the  state,  he  became  the  purchaser 
of  the  premises.     It  is  contended, 
on  the  part  of  the  defendant,  Miller, 
that  his  case  is  out  of  the  general 


rule  which  forbids  a  trustee  to  pur- 
chase on  Ins  own  account  the  trust 
property,  upon  the  ground  that  the 
sale  in  this  case  was  a  judicial  sale, 
made  under  a  decree  against  the 
trustee,  and  based  upon  a  title  par- 
amount to  the  title  of  the  trustee, 
and  to  the  interest  of  the  cestuis 
que  trust.     That  this  is  not  the  rule 
was  adjudged  in  the  case  of  Van 
Epps  v.  Van  Epps  (9  Paige,   237); 
hidings  t\  Bruen  (4  Sandf.  Ch.  R., 
263).     It  is  hardly  possible  to  state 
the  rule  of  equity  too  broadly  or  too 
strongly.      It  will    not    permit    a 
trustee  to  subject  himself  to  the 
temptation  which  arises  out  of  the 
conflict  between  the  interest  of  a 
purchaser  and  the  duty  of  a  trustee. 
It  was  Miller's  duty  as  receiver  to 
make  the  property  bring  the  high- 
est possible  price ;  but  as  purchaser 
this  was  not  his  interest.     The  rule 
is  entirely  independent  of  the  quel  - 
tion  whether  in  point  of  fact  any 
fraud  has  intervened.     It  is  to  avoid 
the  necessity  of  any  such  inquiry 
in  which  justice  might  be  baulked, 
that  the  rule  takes  so  general  a 
form.     After  the  purchase  by  Mil- 
ler, it  follows  that  his  cestuis  que 
trust  had  the  right  either  to  demand 
a  resale  of  the  property,  or  to  adopt 
his  purchase  as  made  for  their  ben- 
efit, subject,  of  course,  in  the  latter 
case,    to   his    lien    for   advances. 
(Slade  v.  Van  Vechten,  11  Paige, 
21.)" 


158 


RECEIVERS. 


[chap.  VII. 


the  cause  have  been  purchased  for  the  receiver,  the  sale  may 
be  set  aside,  even  after  confirmation  by  the  court,  such  a 
case  falling  directly  within  the  principle  of  the  general  rule 
as  above  stated.1  And  when  a  receiver  had  purchased  at  an 
undervaluation  an  annuity,  which  was  charged  upon  certain 
lands  subject  to  his  receivership,  and  which  it  was  his  duty 
to  collect,  the  personal  representatives  of  the  vendor  were 
held  entitled  to  rescind  the  purchase  and  to  recover  the 
annuity.2 

§  195.  While,  as  already  shown,  the  courts  insist  upon 
a  strict  observance  of  the  rule  that  a  receiver  can  not  derive 
any  advantage  from  the  purchase  of  the  trust  property,  yet 
upon  obtaining  consent  of  all  parties  interested  in  the  lands 
forming  the  subject-matter  of  the  litigation,  a  receiver  has 
been  allowed  to  become  a  tenant  of  the  lands,  when  such 
course  appeared  to  the  court  to  be  beneficial  to  the  estate 
and  to  all  parties  in  interest.3 


i  Alven  v.  Bond,  Flan.  &  K,  196. 
The  doctrine  is  very  clearly  set 
forth  in  this  case  by  Sir  Michael 
O'Loghlen,  Master  of  the  Rolls,  in 
the  following  language,  p.  211:  "I 
do  not  at  all  agree  with  the  counsel 
for  the  purchaser,  who  contend 
that  if  the  court  shall  set  aside  this 
sale,  because  the  purchase  was 
made  in  trust  for  the  receiver,  it 
will  introduce  a  new  doctrine  into 
a  court  of  equity,  and  make  an 
order  which  no  other  judge  ever 
before  ventured  to  make,  when  I 
find  it  to  be  the  general  rule  of  this 
court,  founded  on  principles  of  pub- 
lic policy,  that  trustees,  assignees  of 
bankrupts,  solicitors  or  agents  for 
the  assignees,  and  all  persons  fill- 
ing any  confidential  office  in  rela- 
tion to  the  property  to  be  sold,  shall 
not,  without  the  special  leave  of 
the  court,  and  probably  the  assent 
of  all  parties  interested,  purchase 


the  property  with  which  they  are 
by  their  office  connected ;  I  make  no 
new  decision  if  I  apply  that  prin- 
ciple to  a  receiver,  and  hold  that 
the  purchase  made  by  him  at  a  sale 
under  a  decree  of  this  court  of  the 
property  over  which  he  is  acting  as 
receiver,  made  without  the  sanction 
of  the  court  or  the  assent  of  the 
parties  interested,  but  concealed 
from  both,  can  not  be  sustained.  I 
only  apply  a  well  established  rule 
of  the  court  to  a  case  which  I  think 
fully  within  it,  and  show  that  this 
rule  of  a  court  of  equity  is,  as  Lord 
Cottenham,  in  Scarborough  v.  Bor- 
man,  4  Myl.  &  Cr.,  379,  says  our 
legal  system  is,  '  capable  of  adapt- 
ing itself  to  the  exigencies  of  so- 
ciety.' " 

2  Eyre  v.  M'DonneU,  15  Ir.  Ch.,  N. 
S.,  534. 

3Stannus  v.  French,  13  Ir.  Eq., 
161. 


CHAP.  VII.]  FUNCTIONS.  159 

§  196.  When  a  court  of  equity  properly  acquires  juris- 
diction of  the  parties  and  of  the  subject-matter  in  a  cause, 
and  appoints  a  receiver  therein  and  orders  him  to  sell  the 
property  in  controversy,  such  order,  although  irregular  and 
improvident,  can  not  be  assailed  or  questioned  in  a  collat- 
eral action,  and  such  an  action  will  not  he  to  set  aside  the 
order  of  sale  and  proceedings  thereunder.  The  appropriate 
method  of  correcting  such  irregularities  is  by  motion  to  the 
court  making  the  order,  and  an  independent  action  for  that 
purpose  will  not  be  entertained.1  But  when  the  receiver 
has  procured  an  order  of  sale  by  a  fraudulent  imposition 
upon  the  court,  it  has  been  held  that  an  action  would  lie  to 
set  aside  the  sale,  even  though  relief  might  be  had  upon 
motion  before  the  court  appointing  the  receiver.2 

§  197.  "When  a  receiver  applies  for  an  order  of  court  to 
authorize  him  to  sell  certain  of  the  property  in  his  posses- 
sion, for  the  purpose  of  meeting  taxes  due  and  to  become 
due  upon  other  property,  the  evidence  showing  the  neces- 
sity for  such  a  sale  should  be  clear  and  satisfactory  to  the 
court,  and  the  order  of  sale  should  be  specific,  and  should 
designate  the  particular  property  which  the  receiver  is  au- 
thorized to  sell.3 

§  198.  As  regards  the  functions  and  powers  of  receivers  in 
effecting  sales  of  personal  property  entrusted  to  their  charge, 
considerable  latitude  and  discretion  are  allowed  them  as  to 
whether  the  sale  shall  be  in  bulk  or  by  parcels.  And  where 
the  receiver  has  exercised  his  discretion  in  the  matter  in 
good  faith,  the  court  will  not  set  aside  the  sale  merely  be- 
cause it  may  differ  from  the  receiver  as  to  which,  under  all 
the  circumstances,  was  the  best  method  of  selling.4  But 
when  the  order  for  the  appointment  of  a  receiver  was  ob- 
tained by  the  plaintiff  late  at  night,  and  upon  an  ex  parte 

iLibby  v.  Rosekrans,  55  Barb.,  3  Dixon  v.  Rutherford,   26   Ga., 

219.  149. 

2  Hackley  v.   Draper,  60  N.  Y. ,  4  National  Bank  of  the  Metropolis 

88,  affirming  S.  C,  4  Thomp.  &  C.  v.  Sprague,  5  C.  E.  Green,  170. 
(N.  Y.  S.  C.),  614,  2  Hun,  253. 


160  RECEIVERS.  [CHAP.  VII. 

application,  and  the  receiver  sold  the  property  at  private 
sale  early  the  following  morning,  without  notice  to  the  de- 
fendants interested  therein,  the  sale  was  set  aside  and  the 
receiver's  appointment  revoked,  the  proceedings  being  re- 
garded as  contrary  to  all  principles  of  equity,  and  in  con- 
flict with  the  due  and  ordinary  course  of  procedure  in  courts 
of  justice.1 

§  199.  When  a  receiver  is  authorized  and  required  by 
order  of  court  to  sell  real  estate,  the  authority  to  sell  neces- 
sarily carries  with  it  authority  to  give  to  the  purchaser  the 
usual  evidence  of  a  transfer  of  title,  the  power  of  the  re- 
ceiver to  give  the  deed  being  necessarily  implied  from  the 
order  of  sale.  And  while  it  may  be  irregular  for  the  re- 
ceiver to  execute  a  conveyance  of  the  real  estate  sold,  before 
confirmation  of  the  sale  by  the  court,  such  conveyance  is 
not  on  that  account  void,  but  only  voidable,  and  the  sale 
having  been  confirmed  by  the  court,  the  objection  is  re- 
moved.2 But  where,  by  the  terms  of  his  appointment,  a 
receiver  is  authorized  to  sell  the  property  committed  to  his 
trust,  subject  to  the  order  of  the  court,  no  transfer  can 
properly  be  made  or  consummated  by  the  receiver  until  the 
sale  is  reported  to  the  court  and  confirmed,  after  notice  to 
the  parties  who  have  appeared  to  the  action.  And  any 
transfer  before  such  confirmation  is  unauthorized,  and  any 
payment  made  is  at  the  purchaser's  risk.3 

§  199  a.  A  sale  by  a  receiver,  under  an  order  of  court 
which  makes  no  mention  of  prior  liens  or  incumbrances, 
operates  as  a  transfer  of  title  to  the  purchaser  subject  to 
the  lien  of  whatever  incumbrances  may  be  outstanding;  and 
the  purchaser  may  contest  the  validity  of  apparent  incum- 
brances, either  with  respect  to  their  legal  existence,  or  as  to 
the  amount  due.4  Nor  is  the  title  of  a  third  person,  not  a 
party  to  the  cause  in  which  the  receiver  is  appointed  and 

1  Simmons  v.  Wood,  45  How.  Pr.,  a  Simmons  v.  Wood,  45  How.  Pr. 

2C8.  2G8. 

'-'Koontz  v.   Northern  Bank,   1G  4  Hackensack  Water  Co.   v.   De 

WaL,  196.  Kay,  3G  N.  J.  Eq.,  548. 


CHAP.  VII.]  FUNCTIONS.  101 

the  sale  made,  divested  or  affected  by  such  sale.  And  a  re- 
ceiver over  a  partnership  who  sells  the  real  estate  of  the 
firm,  under  an  order  of  court,  sells  it  subject  to  the  lien 
of  a  judgment  against  the  individual  interest  of  one  mem- 
ber of  the  firm.  And  the  title  of  a  purchaser  at  a  sheriff's 
sale  under  such  judgment  will  prevail  over  that  of  a  pur- 
chaser from  the  receiver.1  So  a  sale  of  the  husband's  real 
estate,  by  a  receiver  appointed  in  behalf  of  judgment  cred- 
itors, should  be  made  subject  to  the  dower  interest  of  the 
wife,  and  it  is  improper  to  direct  payment  by  the  receiver 
to  the  wife  of  her  inchoate  right  of  dower  out  of  the  pro- 
ceeds.2 

§  1995.  The  doctrine  of  caveat  emptor  applies  in  cases  of 
receivers'  sales,  like  all  other  judicial  sales,  the  purchaser 
being  chargeable  with  knowledge  that  only  the  interest  of 
the  parties  to  the  suit  can  be  sold  by  the  receiver,  and  it  is 
for  him  to  ascertain  before  purchasing  what  that  interest  is. 
The  rule  applies  to  the  condition  of  the  property  as  well  as 
to  its  title ;  and  to  an  action  by  a  receiver  against  a  purchaser 
for  the  recovery  of  the  purchase  price  of  real  estate  sold  by 
the  receiver,  the  defendant  can  not  plead  the  defective  con- 
dition of  the  property  at  the  time  of  his  purchase,  in  the 
absence  of  fraud  or  misrepresentation.  And  when  such 
purchaser  has  acquiesced  in  and  consented  to  the  ratification 
of  the  sale,  he  can  not  defeat  an  action  for  the  recovery  of 
the  purchase  money  upon  the  ground  that  another  piece  of 
real  estate  was  included  in  the  sale  but  omitted  from  the 
deed  tendered  to  him  by  the  receiver.3 

i  Foster   v.  Barnes,   81    Pa.   St.,        2Lowry  v.  Smith,  9  Hun,  514. 
377.  3  Barron  v.  Mullin,  21  Minn.,  374. 

11 


CHAPTER  YHI. 

OF  ACTIONS  BY  AND  AGAINST  RECEIVERS. 

I.  Principles  Governing  Suits  by  Receivers, §  200 

II.  Pleadings  and  Proofs  in  Actions  by  Receivers,  ...  231 

III.  Suits  by  Receivers  in  Foreign  Courts, 239 

TV.  Defenses  to  Actions  by  Receivers, 245 

V.  Actions  Against  Receivers, 254 


I.  Principles  Governing  Suits  by  Receivers. 

200.  Practice  divergent  in  different  states. 

201.  Receiver  succeeds  to  principal's  rights  of  action;  what  he  must 

show. 

202.  Court  maintains  strict  control  over  receiver;  does  not  permit  un- 

authorized suits. 

203.  Regularity  of  receiver's  appointment  and  his  competency  can  not 

be  questioned  collaterally. 

204.  Appointment  of  receiver  does  not  change  rights  of  action ;  suit 

by  receiver  of  insurance  company ;  sale  prior  to  appointment. 

205.  Defense  available  against  original  plaintiff,  available  against  re- 

ceiver. 

206.  Judgment  in  favor  of  receivers  of  banking  corporation,  bar  to 

subsequent  suit  in  name  of  bank. 

207.  Receiver  not  restricted  in  management  of  suit;  but  limited  to 

existing  remedies. 

208.  Receiver  should  obtain  leave  of  court  before  bringing  action; 

English  and  American  doctrine. 

209.  Conflict  of  authority  as  to  name  in  which  plaintiff  must  sue ;  the 

general  rule  stated. 

210.  Exceptions  to  the  rule ;  suits  in  name  of  receiver. 

211.  The  question  as  regulated  by  statute. 

212.  The  same ;  trover  by  receiver  of  bank ;  suits  by  receiver  of  in- 

surance company. 

213.  On  removal  or  death  of  receiver,  suit  continued  by  his  successor. 

214.  Receiver  substituted  in  lieu  of  original  plaintiff  on  terms. 

215.  Foreclosure  of  mortgage  by  successors  to  original  receivers  of 

bank. 


CHAP.  VII r.]  ACTIONS.  163 

§  216.     Employment  of  counsel  by  receivers ;  should  not  employ  counsel 
of  either  party. 

217.  The  rule  limited  to  cases  of  adverse  interest. 

218.  Receiver  may  bring  action  of  detinue, 

219.  Judgment  recovered  by  receiver,  bar  to  subsequent  suit  by  plaint- 

iff in  original  cause. 

220.  Suit  by  administrator  subsequently  appointed  receiver. 

221.  Distinction  as  to  receiver's  rights  of  action  founded  uDon  title  to 

real  estate. 

222.  Receiver  may  recover  usury  paid  by  principal. 

223.  May  recover  rents  on  notice  to  tenant ;  action  for  unpaid  purchase 

money. 

224.  May  enforce  an  unpaid  subscription. 

225.  Suit  by  receiver  of  corporation;  illegality  of  appointment  no 

defense. 

226.  When  right  of  action  relates  back  to  beginning  of  principal's 

title. 

227.  Failure  of  receiver  to  execute  bond  a  ground  for  nonsuit ;  in- 

formality in  bond. 

228.  May  move  for  judgment  against  sheriff  for  money  collected. 

229.  Receiver's  liability  for  costs. 

230.  May  garnish  plaintiff  in  original  suit. 

§  200.  One  of  the  most  important  functions  exercised  by 
receivers  in  the  discharge  of  their  official  duties  is  that  of 
bringing  such  actions  as  may  be  necessary  to  the  proper 
performance  of  their  trust,  as  well  as  to  secure  and  protect 
the  assets  and  funds  to  whose  control  they  are  entitled  by 
virtue  of  their  appointment.  In  some  of  the  states  the  func- 
tions of  receivers,  as  regards  the  bringing  of  actions,  are 
regulated  to  a  considerable  extent  by  statute,  while  in  others 
the  English  practice  prevails,  leaving  the  entire  subject  to 
be  regulated  by  the  court  making  the  appointment,  in 
accordance  with  the  established  principles  governing  the 
jurisdiction. 

§  201.  In  general,  a  receiver,  by  virtue  of  his  appoints 
ment,  is  clothed  with  only  such  rights  of  action  as  might 
have  been  maintained  by  the  persons  over  whose  estate 
he  has  been  appointed,  and  to  whose  rights,  for  purposes  of 
litigation,  he  has  succeeded.1     It  is  essential,  therefore,  in 

1  Coope  tJ.  Bowles,  28  How.  Pr.,    McHhenny,  5  Jones  Eq.,  290. 
10;  S.  C,  42  Barb.,  87;  Curtis  v. 


lOi  RECEIVERS.  [CHAP.  VIII. 

order  to  sustain  a  suit  brought  by  him  in  his  representative 
capacity,  that  he  allege  and  set  forth  the  equities  of  the 
parties  whose  rights  of  action  he  represents,  and  he  must 
also  show  that  by  the  appointment  of  the  court,  properly 
made  in  a  matter  within  its  jurisdiction,  authority  has  been 
conferred  upon  him,  in  his  representative  capacity  as  re- 
ceiver, to  prosecute  the  aGtion ;  and  failing  to  show  this  he 
can  not  maintain  an  action.1  And  when  an  obligation  has 
been  extinguished  or  paid  to  the  obligee,  his  receiver  can  not 
afterwards  maintain  an  action  thereon,  either  at  law  or  in 

equity." 

§  202.  Courts  of  equity  are  inclined  to  the  exercise  of  a 
strict  control  over  their  receivers  in  the  matter  of  allowing 
them  to  bring  suits  concerning  their  receivership,  and  an 
action  brought  by  a  receiver  is  considered  as  brought  under 
the  order  of  the  court  itself.  And  a  receiver  will  not  be 
permitted  to  abuse  the  power  entrusted  to  him  by  unau- 
thorized suits  against  third  persons,  under  pretense  of  author- 
ity derived  from  the  court.  If,  therefore,  he  institutes  an 
action  in  the  name  of  a  third  person,  without  his  authority 
and  without  any  foundation  or  pretense  of  right,  the  parties 
to  such  suit  are  entitled  to  the  protection  of  the  court  against 
such  unauthorized  proceedings  on  the  part  of  the  receiver, 
who  will  be  directed  to  discontinue  the  action  and  will  be 
enjoined  from  further  proceeding  therein.3 

§  203.  It  would  seem  that  the  regularity  of  a  receiver's 
appointment,  or  the  competency  of  the  person  appointed, 
can  not  be  called  in  question  in  a  collateral  action,  but  must 
be  impeached,  if  at  all,  in  a  direct  proceeding  for  that  pur- 
pose. It  follows,  therefore,  that  in  an  action  instituted  by 
a  receiver  in  matters  connected  with  his  trust,  as  to  obtain 
possession  of  funds  belonging  to  him  in  his  official  capacity, 
if  proper  record  evidence  of  the  appointment  is  produced, 
it  will  be  regarded  as  conclusive  upon  the  question  of  the 


JCoope  v.  Bowles,  42  Barb.,  87;        2 Curtis  v.   Mcllhenny,   5   Jones 
S.  C,  28  How.  Pr.,  10.  Eq.,  290. 

3  In  re  Merritt,  5  Paige,  125. 


CHAP.  VIII.]  ACTIONS.  105 

receiver's  right.  The  court  proceeds,  in  such  a  case,  upon 
the  ground  that  it  is  immaterial  whether  the  appointment 
was  proper  or  improper  in  the  first  instance ;  and  that  while 
it  remains  a  subsisting  order  of  court,  it  is  not  competent 
for  any  one  to  question  it,  unless  by  appropriate  proceedings 
to  test  its  validity.1 

§  204  The  appointment  of  a  receiver  does  not  have  the 
effect  of  changing  any  rights  of  action,  or  of  changing  the 
contract  relations  existing  between  the  original  parties, 
against  whom  the  receiver  is  appointed,  and  their  debtors. 
A  receiver,  therefore,  can  not  maintain  an  action  upon  a 
note  or  obligation  running  to  the  original  party,  which  he 
himself  could  not  have  maintained.2  For  example,  in  the 
case  of  a  mutual  insurance  company,  when  the  obligation 
of  the  assured  upon  a  premium  note  given  for  a  policy  of 
insurance  depends  upon  an  assessment  and  notice  thereof, 
which  assessment  and  notice  have  never  been  given  by  the 
company,  so  that  it  could  maintain  no  action  upon  the  note, 
a  receiver  of  the  company  stands  in  the  same  situation,  and 
will  not  be  allowed  to  sue  without  having  taken  the  neces- 
sary steps  to  fix  the  maker's  liability.3  And  a  receiver  can 
not  maintain  an  action  for  the  recovery  of  property  of  the 
defendant  which  had  been  sold  under  execution  prior  to  his 
appointment.4 

§  205.  For  the  purpose  of  actions  and  suits  connected 
with  their  receivership,  receivers  occupy  substantially  the 
same  relation  which  was  occupied  by  the  original  parties, 
against  whom  or  over  whose  estate  they  were  appointed. 
Any  defense,  therefore,  which  a  defendant  might  have  made 
to  an  action  brought  by  the  original  party  is  equally  avail- 
able, and  may  be  made  with  like  effect  when  the  action  is 
instituted  by  his  receiver.     Thus,  when  receivers  of  a  bank- 

i Vermont  &  Canada  R.  Co.  v.  109;    Bell    v.    Sbibley,    33    Barb., 

Vermont  Central  R.  Co.,  46  Vt.,  010. 

792.     See,    also,   Attorney-General  3  Williams  v.  Babcoek,  25  Barb., 

v.  Guardian  Mutual  Life  Insurance  109.     See,  also,  Tliomas  v.  Whallon, 

Co.,  77  N.  Y.,  272.  31  Barb.,  172. 

2  Williams  v.  Babcoek,  25  Barb.,  « Mcllratb  v.  Snure,  22  Minn.,  391. 


106 


RECEIVERS. 


[CHAP.  VIII. 


ing  corporation  institute  an  action  upon  a  note  given  for  a 
subscription  to  the  capital  stock  of  the  bank,  and  the  maker 
relies  for  his  defense  upon  the  fact  that  the  note  was  obtained 
through  fraudulent  representations  made  by  agents  of  the 
bank  as  to  the  condition  and  value  of  its  stock,  such  defense 
is  available  to  the  same  extent  and  with  like  effect  as  if  in- 
terposed in  an  action  brought  by  the  bank  itself.1  If,  how- 
ever, the  defendant  in  such  a  case  is  himself  culpably 
chargeable  with  participation  in  the  fraud,  having  united 
with  others  in  the  formation  of  a  fraudulent  banking  corpo- 
ration, which  passes  into  the  hands  of  receivers  for  the 
benefit  of  its  creditors,  he  can  not  urge  such  fraudulent 
organization  in  defense  of  an  action  brought  against  him 
by  the  receivers  to  enforce  his  subscription  to  the  capital 
stock.2 

§  206.  When  receivers  of  a  banking  corporation  institute 
an  action  in  one  state  upon  liabilities  due  to  the  bank,  and 
recover  judgment  thereon,  such  judgment  constitutes  a  good 
defense  in  bar  to  an  action  brought  against  the  same  def end- 


i  Litchfield  Bank  v.  Peck,  29 
Conn.,  384.  Sandford,  J.,  says, 
p.  385 :  "  The  only  question  in  this 
case  is,  whether  the  defense  set  up 
can  be  made  available  against  these 
receivers.  That  it  would  have 
been  entirely  so,  in  a  contest  be- 
tween the  defendant  and  the  bank 
itself,  is  undeniable,  and  is  not  de- 
nied ;  but  the  receivers  claim  that 
they  represent  creditors,  and  there- 
fore stand  on  higher  ground  than 
the  bank  ever  stood,  and  that 
against  them  this  defense  can  not 
be  interposed.  That  they  repre- 
sent creditors  may  be  conceded, 
and  that  in  some  cases  they  may 
enforce  claims  which  the  bank  it- 
self could  not  enforce,  need  not, 
perhaps  ought  not,  to  be  denied ; 
but  in  what  way  and  by  force  of 
what  principles  of  law,  equity  or 


justice,  receivers  or  creditors  could 
avoid  the  application  or  escape  the 
force  of  this  defense,  and  compel 
the  payment  of  this  demand,  we 
are  unable  to  discover. 
Neither  in  law,  equity  or  conscience 
was  this  defendant  the  debtor  of  the 
bank,  ncr  had  he  assumed,  nor  was 
he  by  the  charter  or  the  law  charged 
with,  any  responsibility  for  its  debts 
or  obligations.  These  receivers  are 
not  indorsees,  nor  were  they  in  fact 
appointed  until  after  maturity  of 
the  note,  so  that  the  rule  of  policy 
winch  protects  the  holder  of  nego- 
tiable paper  can  have  no  applica- 
tion in  their  favor." 

-  Litchfield  Bank  v.  Church,  29 
Conn.,  137.  And  see  comments 
upon  this  case  in  Litchfield  Bank 
v.  Peck,  29  Conn.,  387,  388. 


CHAP.  VIII.]  ACTIONS.  167 

ants  for  the  same  cause  of  action  in  another  state,  even 
though  the  former  suit  was  brought  in  the  name  of  the  re- 
ceivers, and  the  latter  in  the  name  of  the  bank  itself.  Such 
receivers,  being  empowered  by  the  law  where  they  were 
appointed  to  sue  in  the  corporate  name,  or  in  their  indi- 
vidual names,  and  being  clothed  with  all  the  powers  and 
rights  in  the  collection  of  debts  due  to  the  bank  which  the 
corporation  itself  possessed,  are  merely  its  representatives 
for  the  purposes  of  litigation,  and  the  judgment  recovered 
by  them  in  that  capacity  should  have  the  same  effect  as  if 
recovered  in  the  name  of  the  corporation.1 

§  207.  It  is  important  to  observe,  that  the  general  doc- 
trine of  courts  of  equity,  recognizing  a  receiver  as  the  offi- 
cer or  representative  of  the  court  from  which  he  derives  his 
appointment,  is  not  to  be  understood  as  limiting  or  restrict  • 
iug  his  rights  in  the  management  of  a  suit  which  he  has 
once  undertaken.  And  after  entering  upon  the  litigation, 
he  is  regarded  as  being  entitled  to  all  the  freedom  of  action 
of  any  other  person,  and  the  fact  that  he  appeals  from  a  de- 
cision which  is  adverse  to  him  is  not  of  itself  evidence  of 
bad  faith  or  of  mismanagement  of  his  trust,  and  may  be  a 
meritorious  rather  than  a  censurable  act.2  A  receiver,  how- 
ever, in  all  actions  which  he  may  bring  by  virtue  of  his  re- 
ceivership, must  pursue  the  appropriate  and  existing  remedies, 
and  the  authority  to  sue  conferred  upon  him  by  the  court 
can  not  convert  that  into  an  equitable  right  of  action  which 
was  before  a  legal  one,  or  change  the  established  methods 
of  procedure  for  enforcing  the  right.3  If,  therefore,  the  de- 
mand sued  upon  by  the  receiver  is  legal  in  its  nature,  and 
susceptible  of  enforcement  in  an  action  at  law,  he  can  not 
maintain  a  bill  in  equity.  Thus,  when  by  the  order  of  his 
appointment  the  receiver  of  a  railway  company  is  vested 
with  full  power  to  "  take  into  his  possession  the  bills,  bonds, 

'Bank    of    North    America    v.  3 Freeman  v.   Winchester,  18 

Wheeler,  28  Conn.,  433.  Miss.,   577;  Receiver  v.    First  Na- 

2Devenclorf  v.   Dickinson,   21  tional  Bank,  34  N-  J.  Eq.,  450. 
How.  Pr.,  275. 


1GS 


KECEIVEKS. 


[CHAP.  VIII. 


notes,  and  other  evidences  of  debt,  belonging  to  said  com- 
pany, with  full  power  to  sue  for  and  collect  all  moneys  due 
on  the  same,"  the  right  of  action  thus  conferred  is  to  be  ex- 
ercised in  accordance  with  the  appropriate  existing  reme- 
dies, and  the  receiver  can  not  maintain  a  bill  in  equity,  in 
his  own  name,  to  enforce  a  subscription  to  the  capital  stock 
of  the  company,  since  the  liability  of  defendant  is  purely  a 
legal  one,  to  be  enforced  by  an  action  at  law.1  So  if  the 
proper  mode  of  procedure  to  enforce  the  right  in  question  is 
by  bill  in  equity,  a  receiver  can  not  maintain  this  action  by 
a  mere  petition,  but  must  conform  to  the  established  and 
usual  practice  in  this  regard.2 

§  208.  The  usual  practice,  both  in  England  and  in  Amer- 
ica, before  instituting  actions  by  a  receiver  in  matters  con- 
nected with  his  trust,  is  to  apply  to  the  court  from  which  he 


1  Freeman  v.  Winchester,  18 
Miss.,  577.  This  was  a  bill  by  the 
receiver  of  a  railway  company,  in 
his  own  name,  to  enforce  an  un- 
paid subscription  to  the  capital 
stock  of  the  company.  The  court, 
Sharkey,  C.  J.,  say,  p.  579:  "The 
liability  of  the  respondent  on  Ms 
subscription,  as  it  originally  ex- 
isted, was  purely  legal  in  its  char- 
acter. He  was  liable  to  be  sued  at 
law  by  the  corporation  for  the 
amount  which  he  had  subscribed, 
although  the  charter  may  have 
contained  a  clause  providing  for  a 
forfeiture  of  the  stock,  on  failure 
to  pay.  The  remedy  by  forfeiture 
and  sale  is  but  cumulative.  The 
question  then  is,  can  the  complain- 
ant sue  in  his  own  name  in  equity, 
to  recover  a  debt  which,  as  between 
the  original  parties,  was  recover- 
able only  at  law?  .  .  He  is  but 
an  officer  of  the  court,  appointed 
to  hold  a  fund  pending  litigation 
or  infancy.  But  if  he  can  sue  at 
all  it  must  be  in  the  name  of  the 


party  having  the  legal  right ;  and 
authority  to  sue  does  not  convert 
that  into  an  equitable  right  which 
was  before  purely  legal,  or  he  could 
not  bring  ejectment.  If  he  is  to 
be  regarded  as  an  assignee,  he 
should  sue  at  law,  of  course  on 
mere  legal  demands.  And  if  he  is 
considered  as  trustee,  it  is  the  same 
thing,  for  a  trustee  may  sue  at  law. 
But  does  the  receiver  derive  power 
to  sue  in  this  instance  from  the 
order  of  his  appointment?  It  is  al- 
leged in  the  bill  that  he  is  author- 
ized to  sue  for  and  collect  all 
moneys  due  the  company.  Admit- 
ting that  this  order  conferred  the 
power  to  sue,  it  only  gives  the 
power  to  be  exercised  according  to 
the  appropriate  remedy.  The 
Chancellor  can  not  convert  reme- 
dies from  legal  to  equitable.  If  he 
could  confer  the  power  to  sue,  he 
could  confer  it  to  be  exercised  as 
well  at  law  as  in  equity." 

2  Receiver  v.  First  National  Bank, 
34  N.  J.  Eq.,  450. 


CHAP.  VIII.]  ACTIONS.  109 

derives  his  appointment  for  leave  to  bring  such  actions.  And 
although  it  is  frequently  the  case  that  the  order  of  appoint- 
ment in  general  terms  authorizes  the  receiver  to  sue  for  and 
collect  all  demands  due,  yet  it  is  a  common  practice,  to 
first  obtain  special  leave  of  court  before  beginning  any  ac- 
tion. In  the  English  Court  of  Chancery,  the  rule  was  laid 
down  in  the  time  of  Lord  Thurlow,  that  a  receiver  had  not, 
by  virtue  of  his  appointment,  sufficient  authority,  without 
permission  of  the  court,  to  institute  an  action  of  ejectment 
against  tenants  of  the  estate  over  which  he  was  appointed.1 
The  same  rule  was  recognized  and  adopted  by  the  New- 
York  Court  of  Chancery,  which  required  the  receiver  to 
first  obtain  special  leave  of  court  before  bringing  an  action 
of  ejectment.  And  when  a  receiver  was  appointed  over 
certain  lands  held  in  trust  by  defendant  for  plaintiffs,  and 
the  defendant  trustee  was  enjoined  from  interfering  with 
the  trust  estate,  the  court,  on  the  application  of  the  cestui 
que  trust,  authorized  the  receiver  to  institute  actions  of 
ejectment  for  the  recovery  of  portions  of  the  estate  held  by 
adverse  claimants,  when  it  was  apparent  that  such  course 
was  necessary  for  the  security  and  benefit  of  the  trust.2 
The  same  general  principle  is  recognized  and  enforced  in 
North  Carolina,  where  it  is  held  that,  notwithstanding  the 
adoption  of  a  code  of  procedure  regulating  to  a  certain  ex- 
tent the  powers  of  courts  in  appointing  receivers,  the  right 
of  a  receiver  to  maintain  an  action  is  to  be  governed  by  the 
established  rules  of  equity,  and  the  courts  still  follow  the 
practice  of  the  English  Chancery  in  this  regard,  as  settled 
by  the  authorities.  A  receiver,  therefore,  is  not  allowed  to 
bring  an  action  for  the  recovery  of  property  belonging  to 
the  estate  over  which  he  has  been  appointed,  without  an 
order  of  court  authorizing  the  proceeding.3  So,  in  Georgia, 
it  is  held  that  a  receiver  has  in  general  no  authority  to  bring 
suit  to  recover  property  over  which  he  is  appointed,  with- 

1  Wynn  v.  Lord  Newborough,  3        '-'  Green  v.  Winter,  1  Johns.  Ch  , 
Bro.  C.  C,  88.  60. 

3  Battle  v.  Davis,  66  N.  C,  252. 


iro 


RECEIVERS. 


[chap.  VIII. 


out  the  order  of  court,  and  that  his  general  authority  to 
collect  and  hold  the  assets  is  not  sufficient  to  warrant  him 
in  bringing  suit ;  since,  being  an  officer  of  the  court,  it  is 
for  the  court  to  say  whether  there  shall  be  litigation.1  In 
Maryland,  however,  it  has  been  held,  that  when  receivers 
are  in  possession  of  property,  which  is  taken  from  them 
pending  an  appeal  from  the  order  for  their  appointment,  the 
appeal  bond  standing  in  lieu  of  the  property,  on  their  ap- 
pointment being  affirmed  by  the  appellate  court,  it  is  their 
immediate  duty  to  bring  an  action  upon  the  appeal  bond, 
without  any  special  order  of  court  for  such  purpose.2 

§  209.     Some  conflict  of  authority  exists  in  the  reported 
cases  upon  the  question  whether,  in  the  absence  of  statutory 


1  Screven  v.  Clark,  48  Ga.,  41. 
This  was  an  action  by  a  receiver  of 
a  railway  corporation  to  recover 
certain  cars  of  the  company,  his 
only  authority  being  the  order  ap- 
pointing him  temporary  receiver  of 
the  company  and  of  all  its  prop- 
erty, and  containing  these  words: 
"  And  he  is  hereby  ordered  to  col- 
lect immediately  all  said  property 
together,  and  hold  the  same  sub- 
ject to  the  further  order  of  the 
court."  This  was  held  insufficient 
to  authorize  Mm  to  bring  suit,  Mc- 
Cay,  J.,  observing,  p.  42,  as  fol- 
lows: '"The  rule  is  perhaps  an 
arbitrary  one,  but  is,  nevertheless, 
well  settled,  that  the  receiver  has 
no  right  to  sue  without  express  au- 
thority from  the  Chancellor;  his 
general  authority  to  collect  and  keep 
the  assets  is  not  sufficient  to  justify 
him  in  bringing  an  action.  Daniell's 
Chancery  Practice,  1988  et  seq.  A 
receiver  is  at  last  only  an  officer  of 
the  court,  and  the  foundation  of 
the  rule  probably  is  that  it  is  al- 
ways for  the  court  itself  to  deter- 
mine whether  it  shall  be  dragged 


into  litigation.  At  law  the  party 
having  the  legal  right  to  sue  is  the 
proper  party,  and  if  one  comes 
suing  for  the  property  of  another, 
he  must  show,  as  part  of  his  right 
to  recover,  the  authority  he  has  to 
come  into  a  court  of  law  asserting 
another's  right.  We  think  this 
failure  to  show  any  authority  to 
sue  is  fatal  to  the  case  of  the  plaint- 
iff below." 

2  Everett  v.  The  State,  28  Md., 
190.  The  decision,  however,  rests 
upon  a  law  of  that  state  making  it 
the  receiver's  duty  to  take  charge 
of  and  sell  the  property,  and  col- 
lect the  debts,  and  declaring  that 
they  should  be  ' '  bound  and  held  lia- 
ble for  then  default,  negligence  or 
malfeasance  in  office."  And  the 
court  say  that,  in  such  case,  it  is 
unnecessary  to  inquire  whether,  or- 
dinarily, a  receiver  can  bring  an 
action  without  a  previous  order  of 
the  court  from  which  he  derives 
his  appointment.  See  as  to  the 
doctrine  in  Louisiana,  Helme  v. 
Littlejohn,  12  La.  An.,  298. 


CHAP.  VIII.]  ACTIONS.  171 

authority,  a  receiver  may  institute  and  conduct  actions  in 
his  own  name,  in  matters  concerning  his  receivership,  or 
whether  he  must  sue  in  the  name  of  the  original  party  in 
whose  favor  the  action  accrued.  It  is  believed,  however, 
that  the  weight  of  authority  clearly  supports  the  proposition, 
that  the  receiver  must  sue  in  the  name  of  the  person  having 
the  lesral  right,  and  that  where  neither  the  laws  of  the  state 
nor  the  order  of  his  appointment  authorize  him  to  proceed 
in  his  own  name,  he  can  only  proceed  in  the  name  of  the 
person  in  whom  the  right  of  action  existed  before  the  re- 
ceiver's appointment.1  Thus,  the  receiver  of  a  corporation 
can  not,  by  virtue  of  his  appointment,  prosecute  suits  for 
the  enforcement  of  choses  in  action  and  debts  originally  due 
to  the  corporation,  in  his  own  name,  but  must  proceed  in  the 
name  of  the  corporation,  in  wdiose  favor  the  legal  right  ac- 
crued.2 And  the  rule  applies,  even  though  the  order  of  his 
appointment  authorizes  the  receiver  to  collect  such  choses 
in  action  as  may  come  to  his  hands,  for  which  purpose  he  is 
authorized  to  prosecute  suits  in  the  courts  of  the  state,  and 
he  must  still  proceed  in  the  name  of  the  corporation,  and 
can  not  sue  in  his  own  name.3  So  in  the  case  of  a  receiver 
over  a  partnership,  it  is  held  that  he  can  not  maintain  an 
action  of  trover,  in  his  own  name,  for  the  conversion  of  prop- 
erty before  his  appointment,  but  that  suit  must  be  brought 
in  the  name  of  the  firm  in  whom  the  right  of  action  orig- 
inally  existed.  The  receiver's  appointment,  it  is  held,  does 
not  transfer  to  him  the  legal  rights  of  the  firm  in  any  of 

1  Yeager  v.  Wallace,  44  Pa.  St.,  10  Humph.,  18G;  Holme  v.  Little- 
294;  Justices.  Kirlin,  17  Ind.,  588;  John,  12  La.  An.,  298;  Baker  v. 
Manlove  v.  Burger,  38  Ind.,  211;  Cooper,  57  Me.,  388.  And  see  Igle- 
King  v.  Cutts,  24  Wis.,  627;  Free-  hart  v.  Bierce,  36  111.,  133. 
man  v.  Winchester,  18  Miss.,  577;  2  Battle  v.  Davis,  06  N.  C,  252; 
Battle  v.  Davis,  60  N.  C,  252;  Gar-  Justice  v.  Kirlin,  18  Ind.,  588 ;  Free- 
ver  v.  Kent,  70  Ind.,  428;  Moriarty  man  v.  Winchester,  18  Miss.,  ~>'.~ ; 
v.  Kent,  71  Ind.,  001;  Harrell  v.  Garver  v.  Kent,  70  Ind.,  428;  Mo- 
Kent,  71  Ind.,  602.  See,  also,  In-  riarty  v.  Kent,  71  Ind.,  601;  Har- 
gersoll  v.  Cooper,  5  Blackf.,  426.  rell  r.  Kent,  71  Ind.,  602. 
But  see,  contra,  Wray  v.  Jamison,  3  Battle  v.  Davis,  66  N.  C,  252. 


172 


KECEIVEKS. 


[chap.  VIII. 


their  choses  in  action,  and  trover  can  only  be  maintained  by 
one  who  has  the  legal  right.1     And  where,  pending  litiga- 


1  Yeager  v.  Wallace,  44  Pa.  St., 
294.  But  see  Heline  v.  Littlejohn, 
12  La.  An.,  298.  Yeager  v.  Wal- 
lace was  an  action  of  trover  by  a 
receiver  of  a  partnership  to  recover 
for  the  alleged  conversion  of  firm 
property  before  the  receiver's  ap- 
pointment. Judgment  for  plaint- 
iff, which  was  reversed  on  appeal, 
the  court,  Strong,  J.,  holding  as 
follows,  p.  295:  "But  can  a  re- 
ceiver of  the  property  of  a  partner- 
ship maintain  an  action  of  trover 
in  his  own  name  for  the  conversion 
of  the  personal  property  of  a  firm 
by  a  wrong-doer  before  the  appoint- 
ment of  a  receiver  was  made?  He 
is  but  an  officer  of  the  court  which 
appoints  him,  and  does  not  become 
the  legal  owner  of  the  property 
which  he  is  required  to  take  in 
charge.  The  appointment  of  a  re- 
ceiver does  not  transfer  to  him  the 
legal  rights  of  the  partnership  in 
any  of  then  choses  in  possession 
or  in  action.  Trover  can  only  be 
maintained  by  him  who  has  the 
legal  right.  How,  then,  can  the 
receiver  sue,  except  in  the  name  of 
the  firm?  That  he  can  not,  not 
only  seems  nianif  est  upon  principle, 
but  is  established  by  authority. 
Thus,  in  Taylor  v.  Allen,  2  Atk., 
213,  Lord  Chancellor  Hardwicke 
appointed  a  receiver  to  collect  the 
assets  of  a  testator,  and  empowered 
Mm  to  bring  actions  in  the  name  of 
the  executrix.  In  Pitt  v.  Snowden, 
3  Atk.,  750,  the  same  Chancellor 
said,  a  receiver  must  distrain  in  the 
name  of  him  who  has  the  legal 
right.  This,  however,  can  not  ap- 
ply to  a  case  where  the  tenant  has 


attorned  to  the  receiver,  for  by 
the  attornment  the  legal  right  be- 
comes vested  in  the  receiver,  and 
he  may  then  distrain  in  his  own 
name.  Darnell's  Chan.  Prac,  1977. 
Indeed  I  do  not  find  it  has  ever 
been  decided  that  a  receiver  can 
sue  in  his  own  name  for  any  debt, 
claim,  or  demand  of  a  party  of 
whose  effects  he  has  been  appointed 
receiver,  or  to  recover  the  posses- 
sion or  control  of  any  real  estate 
or  choses  in  action  of  such  party, 
unless  some  statute  has  enabled 
him.  He  has  always  been  regarded, 
not  as  having  the  legal  right,  but 
as  a  mere  custodian  to  take  charge 
of  the  property  during  a  pending 
litigation.  If  possession  be  with- 
held from  him  by  the  party  whose 
property  has  been  taken  charge  of 
by  the  court,  delivery  to  the  re- 
ceiver is  enforced  by  attachment. 
If  a  third  person,  not  a  party  to 
'the  proceedings  in  equity,  withhold 
the  property,  suit  may  be  brought 
by  the  receiver  with  the  consent  of 
the  court,  but  he  must  bring  it  in 
the  name  of  him  who  has  the  legal 
right.  In  New  York,  it  is  true,  a 
receiver  is  more  than  a  custodian. 
He  is  a  statutory  assignee.  But 
this  is  in  consequence  of  the  stat- 
ute of  that  state  of  April  28,  1845, 
Laws,  90,  91,  and  of  the  code  of 
1849.  The  act  of  1845  empowered 
receivers  to  sue  in  their  own  name 
for  any  debt,  claim,  or  demand 
transferred  to  them,  or  to  the  pos- 
session or  control  of  which  they 
are  entitled  as  receivers.  In  Wil- 
son v.  Wilson,  1  Barb.  Chan.  Eep. , 
594,  the  Chancellor  thought  the  act 


CHAP.  VHI.]  ACTIONS.  173 

tion  concerning  certain  real  estate,  a  receiver  is  appointed 
to  take  charge  of  and  lease  the  premises  pendente  lite,  his 
powers  are  to  be  regarded  as  identical  with  those  of  a  receiver 
in  chancery  generally.  He  is  not  an  assignee  of  the  owner, 
and  can  not,  therefore,  maintain  an  action  of  forcible  entry 
and  detainer  in  his  own  name,  to  remove  a  lessee  holding- 
possession  under  a  lease  executed  prior  to  the  receivership, 
and  it  would  seem  to  be  the  proper  course  for  him  to  apply 
for  leave  to  prosecute  the  action  in  the  name  of  the  lessor.1 
So  a  trustee  in  the  nature  of  a  receiver,  appointed  by  the 
court  to  receive  and  collect  certain  notes,  is  not  authorized 
by  virtue  of  his  appointment  to  sue  in  his  own  name  on 
notes  not  made  to  or  assigned  to  himself,  but  must  bring 
his  action  in  the  name  of  the  person  in  whom  is  the  legal 
title.2 

§  210.  Notwithstanding  the  decided  weight  of  authority 
is  in  support  of  the  rule  laid  down  in  the  preceding  section, 
a  contrary  doctrine  has  been  strongly  maintained  in  some 

not  broad  enough  to  transfer  the  suit  in  liis  own  name,  for  any  debt 

title  of  real  estate  to  the  receiver  or  demand  transferred  to  him  (un- 

by  the  mere  order  of  the  court,  der  the  order  of  his  appointment),  or 

and  without  an  actual  conveyance  to  the  possession  or  control  of  which 

from  the  party  to  the  suit  in  whom  he    was  entitled,  under  an  order 

such  legal  title  was  vested.     But  of  the  court,  until  the  act  of  1845. 

the  code  put  real  and  personal  es-  There  is  no  act  of  the  assembly  in 

tate  on  the  same  footing.     Porter  this  state  that  gives  to  a  receiver  of 

v.  Williams  &  Clark,  5  Seld.,  142.  a  court  of  equity  anything  more 

Without  the  statutes  of  New  York,  than  an  equitable  interest  in  the 

it  was  never  ruled  in  that  state  that  property  or  rights  in  action  com- 

a  receiver  had  the  legal  title  even  mitted    to    his    charge,  or    which 

to  personalty.     The    right    to  sue  invests  him  with  the  legal  owner- 

in  liis  own  name  was  always  rested  ship.     It  seems,  therefore,  to  fol- 

upon  the  act  of  1845,  or  upon  the  low  that  he  can  not  sue  in  his  own 

code,  or  upon  an  act  passed  in  1825,  name,   and  that  the  present  suit, 

not   upon  any  rule    or  course  of  being  in  the  name  of  the  receiver, 

practice  in  chancery.     See  1  Johns,  was    erroneously    brought.       The 

Chan.  Cases.     In  Wilson  v.  Allen,  judgment  is  reversed,  and  a  writ 

6  Barb.,  545,  it  is  said  that  at  law  of  restitution  is  awarded." 
an  ordinary  receiver  was  not  con-        l  King  v.  Cutts,  24  Wis.,  627. 
sidered  as  having  the  legal  title,  so        -  Ingersoll  v.  Cooper,  5  Blackf ., 

as  to  authorize  him  to  institute  a  426. 


174:  RECEIVERS.  [CHAP.  VIII. 

of  the  states,  which  have  recognized  and  upheld  the  re- 
ceiver's right  to  institute  actions  in  his  own  name,  by  virtue 
of  his  appointment  and  the  general  powers  thereby  con- 
ferred.1 Thus,  in  Tennessee,  it  is  held  that  the  necessary 
effect  of  the  delivery  of  a  demand  or  chose  in  action  to  a 
receiver,  duly  appointed  by  a  court  of  equity,  is  to  invest 
him  in  his  capacity  as  receiver  with  such  an  interest  in  the 
debt  to  be  recovered  that  he  alone  is  entitled  to  sue  therefor, 
and  in  his  own  name,  the  right  of  action  being  divested 
from  the  original  parties  of  whose  estate  he  has  been  ap- 
pointed receiver.  And  the  addition  to  his  name  of  words 
indicating  his  capacity  as  receiver  is  regarded  as  a  mere 
descrijrtio  person®?  So  in  Louisiana,  it  is  held  that  a  re- 
ceiver of  partnership  assets,  appointed  pending  litigation 
for  the  settlement  of  the  firm  business,  is  authorized  by 
virtue  of  his  appointment  to  institute  an  action  in  his  own 
name  for  the  recovery  of  mOney  due  to  the  firm,  and  that  a 
judgment  in  his  favor  in  such  action  is  a  sufficient  pro- 
tection to  the  defendant  therein.3  So,  too,  it  is  held  in  Maine, 
that  receivers  of  a  bank  may  maintain  in  their  own  name 
an  action  of  forcible  entry  and  detainer,  to  obtain  posses- 
sion of  real  estate  to  which  the  bank  is  entitled.  Their 
right  of  action  in  their  own  name,  under  such  circumstances, 
is  based  upon  the  fact  that  the  right  to  possession,  if  ob- 
tained in  the  name  of  the  bank,  would  require  the  officer 
executing  the  writ  to  put  the  bank  and  not  the  receivers  in 
possession,  while  the  very  purpose  of  the  proceeding  is  to 
enable  the  receivers  to  obtain  possession.4  But  it  is  held  in 
the  same  state,  that  the  appointment  of  receivers  to  wind 
up  the  affairs  of  a  bank  does  not  prevent  the  bank  from 
maintaining  an  action  in  its  own  name,  at  the  instance  of 
the  receivers,  to  recover  upon  a  liability  due  to  the  bank 

1  See    Wray     v.     Jamison,     10        2Wray  v.  Jamison,  10  Humph., 
Humph.,  186;  Helme  V.  Littlejohn,     186. 

12  La.  An.,  298;  Baker  v.  Cooper,  3  Helme  v.  Littlejohn,  12  La.  An., 
57  Me.,  388.  298. 

*  Baker  v.  Cooper,  57  Me.,  888. 


CHAP.  VIII.]  ACTIONS.  175 

from  an  indorser  of  a  promissory  note.1  It  is  held  in  Penn- 
sylvania, that  when  property  has  come  into  a  receiver's 
hands  by  virtue  of  his  appointment,  and  he  has  sold  it  under 
order  of  the  court,  he  may  maintain  an  action  of  assumpsit 
in  his  own  name  to  recover  the  purchase  price.2  And  in 
Georgia,  it  is  held  that  a  court  of  equity  in  appointing  a  re- 
ceiver has  power  to  authorize  him  to  bring  suits  concerning 
the  subject-matter  of  his  receivership,  and  that  when  so 
authorized  he  may  sue  in  his  own  name.3  In  Illinois,  it  is 
held  that  in  an  action  brought  by  receivers  of  the  assets  of 
a  banking  corporation,  to  recover  money  due  to  the  estate, 
as  in  the  foreclosure  of  a  mortgage,  the  bank  itself  need 
not  be  made  a  party  to  the  suit ;  since  its  property  having 
passed  into  the  hands  of  receivers,  the  prima  facie  intend- 
ment is  that  the  bank  has  no  such  interest  in  the  subject- 
matter  as  to  render  it  a  necessary  party,  its  only  right  being 
to  call  upon  the  receivers  for  an  accounting.4 

§  211.  The  question  discussed  in  the  preceding  sections, 
as  to  the  receiver's  right  to  sue  in  his  own  name,  is  some- 
times determined  by  the  statutes  of  the  state  under  which 
he  is  appointed.  And  where  a  statute  provides  for  appoint- 
ing receivers  to  wind  up  the  affairs  of  insolvent  corpora- 
tions, and  authorizes  such  receivers  to  sue  in  the  name  of 
the  corporation  or  otherwise,  a  receiver  appointed  under  the 
statute  may  properly  bring  suit  in  his  own  name  to  recover 
upon  notes  due  to  the  corporation.5  And  where,  under  the 
laws  of  the  state,  a  receiver  of  an  insolvent  corporation  is 

i  American  Bank  v.   Cooper,  54  of    property  of    the    corporation. 

Me.,  438.  Terry  v.  Bamberger,  44  Conn.,  553. 

2Singerly  v.  Fox,  75  Pa.  St.,  112.  And  in  the  same  state,  a  receiver 

3  Hard  wick  v.  Hook,  8  Ga.,  354.  over    a   foreign    corporation,    ap- 

4lglehart  v.   Bierce,  36  111.,  133.  pointed  in  another  state,  may  sue 

5  Manlove  v.  Burger,  38  Ind.,  211 ;  in  his  own  name  to  recover  money 

Hayes  v.   Brotzman,  46  Md.,  519.  due  him  for  the  completion  of  con 

See,   also,   Frank  v.   Morrison,  58  tracts  made  originally  with  the  cor- 

Md.,423.   And  under  the  statutes  of  poration    over    which    he    is    ap- 

Connecticut,  a  receiver  over  a  cor-  pointed.  Cooke  v.  Town  of  Orange, 

poration  may  bring  suit  in  his  own  48  Conn.,  401. 

name  to  recover  for  the  conversion 


17G  RECEIVERS.  [CHAP.  Till. 

Tested  with  the  legal  title  to  all  the  property  of  the  corpora- 
tion, with  full  authority  to  sue  in  his  own  name  for  the  re- 
covery of  debts  due  to  the  corporation,  if  an  indebtedness 
due  to  the  company  has  been  released  and  discharged  in 
fraud  of  the  rights  of  innocent  shareholders,  an  action  to 
recover  such  indebtedness  is  properly  brought  in  the  name 
of  the  receiver.1  So  where  the  laws  of  the  state  governing 
the  appointment  of  receivers  of  corporations  provide  that 
such  receivers  shall  have  full  power  to  sue  for  and  to  collect 
any  demands,  or  to  recover  any  property,  in  the  name  of 
the  corporation  for  the  use  of  its  creditors,  in  the  same  way 
and  to  the  same  extent  that  the  corporation  itself  might  re- 
cover, the  corporation  can  not  prosecute  an  action  in  its  own 
name,  the  right  of  action  being  vested  in  the  receivers  by 
virtue  of  the  statute.  Otherwise,  actions  might  be  prose- 
cuted in  the  name  of  a  dissolved  corporation,  by  unauthor- 
ized persons,  without  right  and  in  violation  of  the  rights  of 
debtors,  creditors  and  shareholders.2 

§  212.  When  the  receiver's  authority  is  derived,  not 
merely  from  the  order  appointing  him,  but  from  a  statute 
under  which  the  appointment  was  made,  his  functions  as 
regards  the  bringing  of  suits,  in  matters  concerning  his  re- 
ceivership, must  be  determined  with  reference  to  the  extent 
of  the  powers  conferred  by  the  statute.  And  where  a  stat- 
ute providing  for  the  appointment  of  receivers  of  insolvent 
corporations,  authorizes  the  receiver  to  sue  in  his  own  name, 
or  otherwise,  and  to  recover  all  the  estate,  debts  and  thinars  in 
action  belonging  or  due  to  the  corporation,  the  term  "chose 
in  action"  will  be  construed  as  extending  to  all  rights  to  per- 
sonal property  not  in  possession,  which  maybe  enforced  by 
action,  whether  growing  out  of  contract  or  tort.  The  re- 
ceiver of  a  banking  corporation,  appointed  under  such  stat- 
ute, may,  therefore,  maintain  an  action  of  trover  for  the 
conversion  of  personal 'property  of  the  bank,  such  as  bonds, 

1  Nathan  v.  Whitlock,   9    Paige    13  Ohio,  2G9.    See,  also,  Renick  v. 
Ch.,  152.  Bank    of   West   Union,   13   Ohio, 

2  Miami  Exporting  Co.  v.  Gano,    298. 


H 


CHAP.  VIII.]  ACTIONS.  IT 7 

even  though  the  alleged  conversion  occurred  before  his  ap- 
pointment.1 So  when  the  court  appointing  a  receiver  over 
an  insolvent  insurance  company  is  empowered  by  statute  to 
make  such  orders  and  decrees  as  may  be  necessary  for  wind- 
ing up  the  affairs  of  the  company,  under  the  general  author- 
ity thus  conferred  the  court  may  authorize  the  receiver  to 
sue  in  his  own  name  to  recover  unpaid  subscriptions  to  the 
capital  stock  of  the  company,2  or  to  recover  money  wrong- 
fully misappropriated  and  wasted  by  the  officers  of  the 
company.^ 

§  213.  In  New  York,  where  the  laws  of  the  state  au- 
thorize receivers  to  bring  actions  in  their  own  name  con- 
cerning matters  pertaining  to  their  receivership,  when  an 
action  is  instituted  by  a  receiver  for  the  recovery  of  money 
due  to  the  estate  over  which  he  is  appointed,  and  the  re- 
ceiver is  afterwards  removed  and  another  is  appointed  in 
his  stead,  it  is  proper  to  substitute  the  successor  as  plaintiff 
in  the  action.  And  in  such  case,  the  death  of  the  first  re- 
ceiver, after  the  substitution,  does  not  affect  or  abate  the 
right  of  action  in  the  successor.4  So  where  an  action  is 
instituted  by  a  banking  corporation  in  the  name  of  its  pres- 
ident, and  a  receiver  is  subsequently  appointed,  who  is 
invested  with  all  the  rights  of  the  corporation  and  of  the 
plaintiff,  as  its  president,  in  the  subject-matter  of  the  action 
already  begun,  the  receiver  must  be  made  a  party  to  such 
suit  before  the  court  will  allow  it  to  proceed,  and  no  order 
affecting  his  right  to  be  substituted  as  plaintiff,  and  to  con- 
tinue the  suit,  will  be  made  without  notice  to  him.5  And 
when,  after  instituting  an  action  concerning  his  receivership, 
the  receiver  dies  and  a  successor  is  appointed,  who  succeeds 
to  all  the  rights  and  duties  of  the  former,  the  action  must, 
be  continued  in  the  name  of  the  new  receiver.     And  the 

!  Gillct  v.  Fairchild,  4  Denio,  80.  statutes  of  Missouri,  State  v.  Fieh- 

2  Gill  v.  Balis,  72  Mo.,  424.  teukanini,  68  Mo.,  289. 

3  Alexander  v.  Relfe,  74  Mo.,  495.  4  Sheldon  v.  Adams,  27  How.  Pi\, 
See  as  to  the  power  of  receivers  to  179;  S.  C,  41  Barb.,  54. 

sue  in  their  own  names  under  the        5  Talmage  v.  Pell,  9  Paige,  410. 
12 


178  RECEIVERS.  [CHAP.  VIII. 

proper  method  of  thus  continuing  the  action  and  bringing 
the  new  receiver  into  the  case,  under  the  New  York  prac- 
tice, is  said  to  be  by  proceedings  in  the  nature  of  a  bill  of 
revivor,  or  a  supplemental  bill.1  So  in  Georgia,  it  is  held 
that  an  action  brought  by  a  receiver  does  not  abate  by  rea- 
son of  his  death,  but  that  it  may  be  continued  in  the  name 
of  his  successor,  when  the  cause  of  action  is  one  which  sur- 
vives. But  the  appropriate  practice  in  that  state,  in  sub- 
stituting the  successor  as  plaintiff  in  the  action,  is  said  to 
be  by  sci.fa.  to  the  defendant.2 

§  214.  When  a  receiver  is  appointed  of  the  effects  and 
estate  of  the  plaintiff  in  an  action,  and  moves  to  be  substi- 
tuted in  lieu  of  the  original  plaintiff  and  to  continue  the 
action  in  his  own  name  as  receiver,  it  is  competent  for  the 
court,  in  granting  the  motion,  to  impose  such  conditions  as 
may  be  necessary  to  promote  the  ends  of  justice.  For  ex- 
ample, when  an  action  is  brought  upon  a  note,  the  defense 
being  a  failure  or  want  of  consideration,  and  by  the  fault 
or  negligence  of  the  parties  representing  the  plaintiff,  the 
action  has  been  permitted  to  slumber  for  a  period  of  years 
sufficient  to  have  barred  a  recovery  upon  the  note,  and  a 
receiver  of  the  original  plaintiff,  seven  years  after  plaintiff's 
death,  moves  to  be  substituted  in  his  stead  and  to  continue 
the  action,  the  court  may  properly  impose  upon  him,  as  a 
condition  of  granting  his  motion,  that  he  assume  the  burden 
of  proving  the  consideration  of  the  note.3  So  when  a 
corporation  institutes  an  action  for  the  foreclosure  of  a 
mortgage,  and  a  receiver  is  afterward  appointed  over  the 
corporation  in  another  state,  in  which  it  was  incorporated, 
it  is  proper  to  substitute  the  receiver  as  complainant  in  the 
foreclosure  suit,  upon  such  terms  as  may  be  appropriate  for 
the  protection  of  any  citizens  of  that  state  who  may  be 
creditors  of  the  company,  and  for  securing  obedience  to  the 
orders  of  the  court  with  respect  to  the  fund  which  may  be 

i  Palmer  v.  Murray,  18  How.  Pr.,        3Livingston  v.  Olyphant,  2  Rob. 
545.  (N.  Y.),  639. 

a  Searcy  v.  Stubbs,  12  Ga.,  437. 


CHAP.  VIII.]  ACTIONS.  179 

realized  by  the  suit.1  And  the  appointment  of  a  receiver 
over  a  corporation  does  not  afford  ground  for  the  continu- 
ance of  an  action  previously  brought  against  the  corpora- 
tion.2 JSTor  is  it  error  for  the  court  in  which  an  action  is 
pending  against  a  corporation  at  the  time  of  appointing  a 
receiver  of  its  affairs  to  refuse,  upon  application  of  the  cor- 
poration defendant,  to  join  the  receiver  as  defendant,  and  if 
he  desires  to  defend  he  should  himself  make  the  application.3 

§  215.  A  mortgage  of  real  estate,  executed  to  receivers 
of  a  banking  corporation  to  secure  an  indebtedness  due 
from  the  mortgagor  to  the  bank,  may  be  foreclosed  by  suc- 
cessors of  the  original  receivers,  in  their  own  name,  in  a 
state  other  than  that  in  which  they  were  appointed.  And 
in  such  foreclosure  proceedings,  the  bank  itself  need  not  be 
joined  as  a  party,  it  being  presumed  to  have  no  property  or 
interest  in  jeopardy,  and  the  proceedings  being  in  reality 
for  the  benefit  of  its  creditors.4 

§  216.  The  employment  of  counsel  by  receivers  is  re- 
garded as  an  appropriate  means  to  attain  the  end  sought 
by  the  litigation.  The  general  rule,  however,  subject  to  the 
limitations  to  be  hereafter  noticed,  is  that  the  receiver 
should  not  employ  the  counsel  of  either  of  the  parties  to 
the  litigation  in  which  he  was  appointed ;  since  their  duty 
being  to  protect  the  interests  of  their  respective  clients  and 
to  watch  the  receiver's  proceedings,  to  the  end  that  a  faith- 
ful performance  of  his  duties  may  be  insured,  they  are  not 
regarded  as  competent  to  act  as  counsel  for  the  receiver, 
and  their  undertaking  to  act  in  such  a  capacity  might  fre- 
quently cast  upon  them  inconsistent  and  conflicting  duties, 
which  could  not  be  properly  discharged  by  one  and  the 
same  person.5    It  is  also  regarded  as  improper,  when  a  re- 

1  National  Trust  Co.  v.  Murphy,  5  Ryckman  v.  Parkins,  5  Paige, 

30  N.  J.  Eq.,  408.  543;  In  re  Ainsley,  1  Edw.   Ch., 

2 Toledo,    W.    &   W.  R.   Co.  v.  576;  Ray  v.  Macomb,  2  Edw.  Ch., 

Beggs,  85  111.,  80.  165;  Adams  v.  Woods,  8  Cal.,  306; 

3  Mercantile     Insurance    Co.    v.  Moore  v.   O'Logldin,   3  L.  R.  Ir., 

Jaynes,  87  HI.,  199.  405.    See,  also,  Blair  v.  St.  L.,  H. 

<  Iglehart  v.  Bieroe,  36  El.,  133.  &  K.  R.  Co.,  20  Fed.  Rep.,  348. 


ISO  KECEIVEKS.  [CHAP.  VIII. 

ceiver  seeks  leave  of  court  to  bring  an  action  in  relation  to 
personal  property  pertaining  to  his  receivership,  to  employ 
the  counsel  of  the  persons  holding  the  property,  or  inter- 
ested therein,  which  is  the  subject-matter  of  the  contro- 
versy.1 And  when  counsel  for  the  plaintiff,  in  a  proceeding 
for  the  dissolution  of  a  partnership,  have  also  acted  as  asso- 
ciate counsel  for  the  receiver,  the  court  has  refused  to  allow 
a  claim  for  compensation  in  their  behalf.2 

§  21 7.  It  is  to  be  observed,  however,  that  the  rule,  as 
above  stated,  prohibiting  a  receiver  from  employing  the 
counsel  of  either  party  in  the  cause,  is  limited  in  its  appli- 
cation to  cases  where  the  receiver  is  acting  adversely  to 
one  of  the  parties  to  the  litigation,  since  it  is  only  in  such 
cases  that  there  can  be  any  impropriety  in  the  employment 
of  such  counsel  by  the  receiver.3  And  the  rule  is  intended 
only  for  the  protection  of  the  rights  of  the  parties  them- 
selves, and  can  not  be  invoked  by  a  stranger  to  the  original 
action  in  which  the  receiver  was  appointed.  Where,  there- 
fore, no  objection  is  urged  by  such  parties,  the  receiver  may 
employ  the  counsel  of  either  of  them  to  aid  him  in  the  dis- 
charge of  his  trust ;  and  a  mere  stranger  to  the  original  action 
will  not  be  heard  to  object  that  the  receiver  has  employed 
such  counsel  to  institute  an  action  against  him.4  And 
when  a  receiver  is  appointed  in  a  creditors  suit  brought  to 
set  aside  fraudulent  transfers  of  his  property  by  the  judg- 
ment debtor,  it  is  regarded  as  especially  appropriate  that 
the  receiver  should  employ  the  coimsel  for  the  creditors, 
who  is  familiar  with  the  litigation  resulting  in  the  receiver- 
ship.5 

§  213.  A  receiver,  duly  appointed  by  a  court  of  compe- 
tent jurisdiction,  may  maintain  an  action  of  detinue  for 
property  which  has  been  in  his  possession  as  receiver;  for 

i  In  re  Ainsley,  1  Edw.  CIi.,  5TG.        4  "Warren  v.  Spragne,   11   Paige, 

2  Adams  v.  Woods,  8  CaL,  306.         200,  affirming  S.  C,  4  Edw.  Ch., 

3  Smith  v.  New  York  Consolidated    416. 

Stage  Co.,  JJ8  How.  Pr.,  377 ;  S.  C,  5  Shainwald  v.  Lewis,  8  Fed.  Rep., 
18  Ab.  Pr.,  431.  878. 


CHAP.  VIII.]  ACTIONS.  181 

while  lie  can  not  maintain  the  action  upon  the  ground  of 
right  of  property  in  himself  merely  by  virtue  of  his  ap- 
pointment, he  is  yet  entitled  to  its  possession,  and  the  right 
of  possession  is  sufficient  foundation  for  the  action.1 

§  219.  "Where  a  receiver  has  brought  an  action  and  re- 
covered judgment  therein,  for  the  benefit  of  the  plaintiff  in 
the  action  in  which  he  was  appointed,  such  proceedings 
constitute  a  bar  to  a  subsequent  suit  brought  by  such  plaint- 
iff for  the  same  cause  of  action.  Under  such  circumstances, 
the  receiver  is  regarded  as  the  representative  of  the  plaintiff, 
just  as  an  executor  or  administrator  represents  the  interests 
of  the  estate  of  a  deceased  person.  And  to  permit  one  at 
whose  solicitation  the  receiver  was  appointed  to  prosecute  a 
demand  for  which  judgment  has  already  been  obtained  for 
his  benefit  by  the  receiver,  would  be  to  multiply  unneces- 
sary litigation.2 

§  220.  To  warrant  a  receiver  in  bringing  an  action  at 
law,  he  must  either  have  in  himself  the  legal  title  to  the 
matter  or  thing  in  controversy,  or  must  bring  the  action  in 
the  name  of  the  person  having  such  legal  title.  When, 
therefore,  an  action  is  brought  by  an  administrator  to  re- 
cover upon  a  promissory  note  due  to  the  deceased,  and  the 
proceedings  are  subsequently  amended  by  changing  the 
character  of  the  plaintiff  from  that  of  administrator  to  that 
of  receiver,  such  an  amendment  is  an  abandonment  of  the 
capacity  in  which  he  originally  sued,  and  virtually  destroys 
the  action.3 

§  221.  In  Wisconsin,  a  distinction  is  drawn  between  ac- 
tions brought  by  a  receiver  to  remove  obstructions  to  title 
and  determine  adverse  claims,  or  to  obtain  a  transfer  or  con- 
veyance of  title  to  the  receiver,  and  actions  brought  by  him 
to  recover  for  injuries  to  real  estate,  or  for  the  recovery  of 
its  possession.  The  former  class  of  actions  are  regarded  as 
founded  upon  the  theory  that  the  receiver  has  not  obtained 

i  Boyle  v.  Townes,  9  Leigh,  158.        s  Newell    v.    Fisher,    24    Miss., 
2Tinkham  v.  Borst,  24  How.  Pr.,     392. 
246. 


132  EECEIVEES.  [CHAP.  VTTI. 

title  to  the  realty,  while  the  latter  are  based  upon  the  as- 
sumption of  title  in  himself.  And  a  receiver  in  that  state, 
appointed  in  proceedings  supplementary  to  execution  under 
the  code  of  procedure,  to  take  charge  of  the  estate  of  a  de- 
fendant in  a  divorce  suit,  against  whom  a  decree  for  alimony 
has  been  rendered,  may  maintain  the  former  class  of  actions ; 
he  may,  therefore,  bring  an  action  to  set  aside  a  fraudulent 
conveyance  of  defendant's  real  estate,  made  by  him  with  a 
view  to  defeat  the  decree  for  alimony.1 

§  222.  Upon  the  question  of  what  rights  of  action  pass 
to  a  receiver  by  virtue  of  his  appointment,  it  has  been  held 
in  New  York,  under  a  statute  conferring  a  right  of  action 
upon  a  borrower  to  recover  back  money  which  he  has  paid 
by  way  of  usury,  that  this  right  of  action  passes  to  his  re- 
ceiver, who  may  maintain  a  suit  for  the  recovery  of  the 
usurious  payments.  But  since  the  right  of  action  in  such  a 
case  is  wholly  dependent  upon  statute,  it  can  only  be  sus- 
tained if  brought  within  the  time  prescribed  by  the  statute.2 

§  223.  To  entitle  a  receiver  to  sue  for  and  recover  rents 
accruing  from  property  of  a  defendant  debtor  over  whose 
estate  he  is  appointed,  he  must  give  notice  of  his  appoint- 
ment to  the  tenant,  and  without  such  notice  he  can  not 
maintain  an  action.  The  object  of  the  notice  is  twofold: 
first,  to  protect  the  estate  from  payment  to  the  wrong  per- 
son ;  and  secondly,  to  prevent  the  tenant  from  dealing  with 
the  former  owner  in  ignorance  of  the  appointment  of  a 
receiver.3  But  when  one  has  made  a  deed  of  real  estate, 
absolute  upon  its  face,  but  intended  in  the  nature  of  a  mort- 
gage as  security  for  a  loan,  and  the  grantee  sells  the  prem- 
ises conveyed,  a  receiver  of  the  grantor  may  maintain  an 


1  Barkers.  Dayton,  28  Wis. ,  367.  to  the   receiver,  Foster  v.  Town- 
Arid  see,  as  to  the  right  of  action  of  shend,  12  Ab.  Pr.,  N.  S.,  469. 
a  receiver   under  the  New  York  -  Palen  v.  Johnson,  46  Barb.,  21. 
code  of  procedure,  to  set  aside  a  And    see    Palen   v.    BushneU,    46 
fraudulent  conveyance  of  defend-  Barb.,  24. 
ant's  property,   where  no  assign-  3  Hunt  v.  Wolfe,  2  Daly,  298. 
ment  has  been  made  by  defendant 


CHAP.  VIII.]  ACTIONS.  183 

action  against  the  grantee  for  the  balance  of  the  purchase 
money  due,  after  satisfying  the  amount  loaned.1 

§  224.  "When  several  persons  enter  into  a  subscription  to 
contribute  certain  sums  to  a  common  object,  and  on  pro- 
ceedings in  equity  by  some  of  the  subscribers  a  receiver  is 
appointed  to  take  possession  of  the  funds  and  assets  realized 
by  the  subscription,  it  would  seem  that  the  receiver  has  the 
same  right  of  action  to  enforce  an  unpaid  subscription  that 
the  other  subscribers  would  have  had.2  Nor  does  it  consti- 
tute any  objection  to  such  suit  by  the  receiver  that  he 
represents  all  parties  to  the  subscription,  including  the  de- 
fendant, whose  subscription  he  is  seeking  to  enforce  by  ac- 
tion.3 

§  225.  In  an  action  brought  by  the  receiver  of  a  corpo- 
ration against  a  debtor  to  the  corporation,  when  judgment 
was  obtained  on  failure  to  answer,  and  defendant  moved  to 
set  aside  the  judgment  to  enable  him  to  set  up  in  defense 
the  illegality  of  plaintiff's  appointment  as  receiver,  it  was 
held  that,  as  plaintiff  was  acting  under  an  order  of  court, 
which  was  acquiesced  in  by  the  corporation  over  whose  as- 
sets he  was  appointed  receiver,  the  defendant  could  not 
object  to  irregularities  in  the  appointment,  if  enough  ap- 
peared in  the  original  proceedings  to  give  the  court  juris- 
diction.4 

§  22G.  When  a  receiver  is  authorized  and  directed,  by 
the  terms  of  the  order  or  decree  appointing  him,  to  collect, 
and,  if  necessary,  to  sue  for  the  hire  of  certain  property,  his 
right  of  action  will  be  held  to  relate  back  to  the  beginning 
of  his  principal's  title;  and  being  substituted  in  place  of 
the  owners  of  the  property,  he  is  subrogated  to  all  their 
rights.5 

§  227.  It  has  been  held  that  the  failure  of  a  receiver  to 
execute  a  bond  with  sureties,  as  required  by  the  order  ap- 

i  Van  Dusen  v.  Worrell,  4  Ab.  Ct.  "  Lathrop  v.  Knapp,  37  Wis. ,  307. 

Ap.  Dec,  473.  4  Jay  v.  De  Groot,  17  Ab.  Pr.,  36, 

2  Lathrop  v.  Knapp,  27  Wis. ,  214,  note, 

opinion  of  Dixon,  C.  J.;  S.  C,  37  5  Hard  wick    v.     Hook,    8    Ga,, 

Wis.,  307.  354. 


lS-i  RECEIVERS.  [CHAP.  VIII. 

pointing  him,  was  sufficient  ground  for  a  nonsuit  in  an  ac- 
tion instituted  by  the  receiver  in  his  official  capacity,  since 
no  title  could  vest  in  him  until  he  had  complied  with  the 
order  requiring  the  bond.1  But  a  mere  informality  in  a 
bond  executed  by  a  receiver  appointed  in  a  creditor's  suit, 
can  not  be  taken  advantage  of  by  the  defendant  in  an  action 
brought  by  such  receiver,  and  only  the  judgment  debtor 
can  take  advantage  of  such  irregularity.2 

§  228.  Where  a  statute  of  the  state  authorizes  judgment 
against  a  sheriff  for  money  collected  by  him  in  his  official 
capacity,  such  judgment  to  be  entered  upon  motion  in  be- 
half of  the  person  entitled  to  the  fund  collected,  a  receiver 
of  such  person,  being  entitled  to  receive  the  fund  in  behalf 
of  the  original  parties,  may  properly  move  for  judgment 
against  the  sheriff.3 

§  229.  As  regards  the  liability  of  a  receiver  for  costs  in 
actions  instituted  by  him  concerning  his  receivership,  he 
stands  in  much  the  same  relation  as  an  executor  or  admin- 
istrator prosecuting  in  behalf  of  an  estate,  and  is  entitled 
to  the  same  consideration,  being  an  officer  of  the  court. 
And  when  he  has  acted  in  good  faith,  he  should  not  be  held 
liable  for  costs  for  not  proceeding  to  the  trial  of  a  cause 
which  he  has  noticed  for  trial,  but  which  he  has  been  pre- 
vented from  trying  by  sufficient  reasons,  such  as  the  absence 
of  a  material  and  necessary  witness.4 

§  230.  Since  a  receiver  represents  all  parties  in  the  ac- 
tion, whether  plaintiffs,  defendants  or  creditors,  and  may 
take  possession  of,  and  exercise  control  over,  all  matters 
connected  with  his  receivership,  he  may,  in  an  action  insti- 
tuted by  him  in  his  official  capacity,  garnish  the  plaintiff  in 
the  suit  in  which  he  was  appointed.5 

1  Johnson  v.  Martin,  1  Thomp.  &  receivers  to  give  security  for  costs 
C.  (N.  Y.  Supreme  Court),  504.  under  the  New  York  code  of  pro- 

2  Morgan  v.  Potter,  17  Hun,  403.  cedure,  Kimberly  v.  Stewart,  22 
3Goss  v.  Southall,  23  Grat,  825.  How.  Pr.,  281;  Kimberly  v.  Good- 
4  St.  Johnr.  Denison,  9  How.  Pr.,    rich,  22  How.  Pr.,  424;  Kimberly 

343.    See  further  as  to  costs  against    v.  Blackford,  22  How.  Pr.,  443. 
receivers,  Hubbell  v.  Dana,  9  How.        5  McDonald  v.  Carney,  8  Kan., 
Pr.,  424.     And  see  as  to  requiring    20. 


CHAP.  VIII.]  ACTIONS. 


1S5 


II.  Pleadings  and  Proofs  in  Actions  by  Eeceivers. 

g  231.     Receiver  must  set  forth  his  authority  in  traversable  terms. 

232.  Conflict  of  authority ;  stringency  of  former  rule  in  New  York. 

233.  Later  New  York  rule  less  stringent ;  general  averment  held  suf- 

ficient. 

234.  Allegations  required  in  action  by  receiver  in  creditor's  suit. 

235.  Execution  of  bond  by  defendant  to  receiver,  when  an  estoppel. 

236.  Action  by  receiver  of  insolvent  insurance  company ;  receiver  of 

partnership. 

237.  Averments  as  to  appointment  of  receiver  of  national  bank. 

238.  Rule  as  to  proof  of  appointment  required  on  the  trial. 

§  231.  Upon  the  question  of  the  extent  to  which  a  re- 
ceiver, in  an  action  brought  by  him  in  his  official  capacity, 
should  set  forth  in  his  pleadings  the  authority  under  which 
he  acts  and  the  proceedings  of  the  court  in  the  original  suit 
from  which  he  derives  his  appointment,  the  authorities  are 
not  altogether  harmonious  or  reconcilable.  The  general 
principle,  however,  may  be  regarded  as  uncontroverted, 
that  a  receiver,  like  any  other  person  bringing  suit  under 
special  authority,  must  duly  allege  and  set  forth  his  author- 
ity in  the  pleadings,  and  this  must  be  alleged  in  a  travers- 
able form,  so  that  issue  may  be  taken  thereon ;  in  which 
event  it  must  be  proven  upon  the  trial,  in  like  manner  as 
any  other  traversable  fact.1  Or,  stated  in  other  words,  the 
rule  is  that  sufficient  facts  should  be  alleged  to  show  that 
the  appointment  has  actually  been  made,  and  these  facts 
should  be  alleged  in  issuable  form.2 

§  232.  But  in  attempting  to  determine  how  far  the  re- 
ceiver's pleadings  must  set  forth  the  original  proceedings  or 
appointment,  so  as  to  render  them  issuable,  a  want  of  har- 
mony becomes  apparent  in  the  decided  cases.     Under  the 

1  Bangs  v.   Mcintosh,   23  Barb.,  of  the  receiver's  appointment,  un- 

591.    And  see  Stewart  v.   Beebe,  der  the  New  York  code  of  proced- 

28  Barb.,  34.  ure,  and  as  to  the  method  of  taking 

2 White    v.    Low,    7  Barb.,   204.  advantage    of    their  insufficiency, 

See,  as  to  sufficiency  of  allegations  Cheney  v.  Fisk,  22  How.  Pr.,  236. 


1S6  BECEIVERS.  [CHAP.  VTCT. 

earlier  decisions  of  the  New  York  courts  bearing  upon  this 
question,  a  somewhat  stringent  rule  was  adopted.  And 
it  was  held  that  the  receiver  must  set  forth  the  time  and 
mode  of  his  appointment,1  as  well  as  the  place,2  in  order 
that  defendant  might  be  enabled  to  take  issue  upon  those 
points.  Thus,  when  the  receiver  of  a  banking  corporation, 
deriving  his  appointment  and  authority  under  a  statute  con- 
ferring upon  him  rights  of  action  in  his  own  name  for  the 
recovery  of  demands  due  the  corporation,  brought  an  action 
of  trover  to  recover  certain  bonds,  the  property  of  the  bank, 
it  was  held  insufficient  that  he  should  allege  in  his  declara- 
tion, merely  in  general  terms,  that  he  was  duly  appointed 
receiver  of  the  bank,  since  such  an  averment  was  not  issu- 
able or  triable ;  and  that  he  should  set  forth  the  particulars 
of  his  appointment,  in  order  that  the  court  might  determine 
whether  he  was  duly  appointed.3 

§  233.  The  later  decisions  in  New  York,  however,  have 
very  greatly  relaxed  the  stringency  of  the  former  rule ;  and 
it  is  now  held  that  in  actions  by  a  receiver  to  recover  upon 
obligations  due  to  a  defendant  debtor,  over  whose  estate  the 
receiver  has  been  appointed,  an  averment  of  his  appoint- 
ment in  general  terms,  as  that  he  was  at  such  a  time  duly 
appointed  receiver,  is  sufficient  to  sustain  the  action ;  and 
under  such  an  averment  the  receiver  may,  upon  the  trial, 
show  all  the  necessary  facts  conferring  jurisdiction.4  And 
it  is  held  unnecessary  to  set  forth  all  the  proceedings  show- 
ing the  appointment,  it  being  sufficient  if  enough  is  alleged 
to  enable  defendant  to  take  issue.5 

1  Dayton  v.  Connah,  18  How.  Pr.,  This  was  an  action  by  the  receiver 
326.  of  the  Bowery  Bank,   to   recover 

2  White  v.  Low,  7  Barb.,  204.  upon  a  note  due  to  the  bank.     The 
3Gilleti\  Fairchild,  4  Denio,  80.     complaint    alleged    that    "by    an 

4  Eockwell  v.  Merwin,  45  N.  Y. ,  order  of  the  supreme  court  of  the 
166,  affirming  S.  C,  1  Sweeney,  state  of  New  York,  made  at  the 
484,  8  Ab.  Pr.,  N.  S.,  330.  See,  city  hall  of  the  city  of  New  York 
also,  Manley  v.  Rassiga,  13  Hun,  on  the  5th  day  of  November,  1857, 
288.  the  plaintiff  was  duly  appointed  re- 

5  Stewart  v.  Beebe,  28  Barb.,  34.  ceiver  of  the  Bowery  Bank,  of  the 


CHAP.  VIII.]  ACTIONS.  187 

§  234.  "Where,  however,  a  receiver  of  a  judgment  debtor, 
appointed  on  proceedings  supplementary  to  execution  by 
judgment  creditors,  under  the  New  York  code,  institutes  an 
action  to  set  aside  an  assignment  of  his  property  made  by 
the  debtor,  it  would  seem  to  be  necessary  that  the  receiver 
should  state  the  equities  of  the  creditors  whom  he  repre- 
sents ;  since  he  is  only  clothed  with  such  rights  of  action, 
for  the  purpose  of  setting  aside  such  an  assignment,  as 
might  have  been  maintained  by  the  creditors  themselves. 
It  has  accordingly  been  held  insufficient,  in  such  a  case,  for 
the  receiver  to  allege  merely  that  he  was  appointed  receiver 
in  the  creditors'  suit,  but  the  judgment  and  other  facts  nec- 
essary to  maintain  that  action  should  be  set  forth.1 

§  235.  "While  the  cases  already  cited  sufficiently  indicate 
that  the  receiver  must  set  forth,  at  least  in  general  terms, 
the  authority  by  virtue  of  which  he  institutes  the  action,  it 
may  happen  that  the  defendant  is  estopped  by  his  own  con- 
duct or  admissions  from  denying  the  right  of  the  receiver 
to  sue  in  that  capacity.  Thus,  when  in  an  action  brought 
by  a  receiver,  defendant  demurs  and  his  demurrer  is  over- 
ruled, and  he  then  obtains  leave  to  plead  to  the  merits,  upon 
condition  of  his  executing  a  bond  with  sufficient  sureties, 
conditioned  to  abide  the  result  of  the  action,  the  execution 
of  such  bond  will  be  regarded  as  an  admission  by  the  obli- 
gors, not  only  that  the  plaintiff  was  duly  appointed  receiver, 
but  that  he  was  authorized  to  bring  the  action  mentioned 
in  the  condition  of  the  bond.  And  when,  in  such  case,  the 
receiver  obtains  judgment  in  the  original  action,  and  then 
brings  suit  upon  the  bond,  it  is  not  necessary  for  him  to 


city  of  New  York,  upon  filing  cer-  possession    of    the    property    and 

tarn    security  therein  mentioned;  effects    of    the    bank    as    receiver 

which  said  security  was  duly  filed  thereof."     Held,   upon   demurrer. 

on  the  6th  day  of  November,  1857;  that  this  was  a  sufficient  allegation 

and  that  the  plaintiff  thereupon  en-  of  plaintiff's  appointment  and  title. 

tered  upon  the  duties  of  Ins  appoint-  l  Coope  v.  Bowles,  28  How.  Pr., 

ment,  and  is  now  in  the  lawful  10;  S.  C.,  42  Barb.,  87. 


1SS  RECEIVERS.  [CHAP.  VIII. 

prove  either  his  appointment,  or  his  authority  to  bring  the 
action.1 

§  236.  In  Indiana,  it  is  held,  when  an  action  is  brought 
by  the  receiver  of  an  insolvent  insurance  company  to  recover 
an  assessment  upon  premium  notes  due  to  the  company, 
that  it  is  not  necessary  for  the  receiver  to  present  with  his 
pleadings  a  transcript  of  the  decree  against  the  insurance 
company,  under  which  he  derives  his  appointment,  and  by 
which  the  assessment  was  made  upon  the  premium  notes, 
since  the  evidence  of  his  right  of  action,  although  essential 
to  a  recovery,  is  not  the  foundation  of  the  action,  and  rest  s 
only  in  averment.2  And  in  an  action  brought  by  the 
receiver  of  a  partnership  to  recover  an  indebtedness  due  to 
the  firm,  the  omission  of  any  averment  as  to  when  or  by 
what  court  he  was  appointed  will  be  cured  by  verdict.3 

§  237.  In  an  action  brought  by  the  receiver  of  a  national 
bank,  appointed  by  the  comptroller  of  the  currency  under 
the  national  banking  act  of  June  3,  1863,  it  is  held  that  the 
fact  of  the  receiver's  appointment,  alleged  in  general  terms, 
is  all  that  is  in  strictness  necessary  to  sustain  the  action. 
That  the  emergency  had  arisen,  and  that  the  adjudication 
establishing  it,  which  the  law  requires  to  precede  and  justify 
the  appointment,  had  been  made,  need  not  be  alleged  or 
proven  as  between  the  receiver  and  a  debtor  of  the  bank, 
any  further  than  the  proof  afforded  by  the  appointment 
itself,  followed  by  the  acquisition  of  the  assets.4 

1  Scott  v.  Duncombe,  49  Barb.,  73.  States ;  and  that  on  said  September 

2Boland  v.  Whitman,  33  Ind.,  64.  5,  1867,  this  plaintiff  was  duly  ap- 

3Griesel  v.  Schnial,  55  Ind.,  475.  pointed  a  receiver  of  said  bank  by 

4  Piatt  v.  Crawford,  8  Ab.  Pr..  N.  said  Hiland  R.  Hulburd,  comptrol- 

S.,  297.     In  this  case,  the  receiver  ler  of  the  currency,  in  accordance 

set  forth  in  his  complaint  the  cor-  with  the  provisions  of  said  act  of 

porate  existence  of  the  bank  under  congress,     and    the     amendments 

the  act  of  congress,  with  the  follow-  thereof,  by  and  with  the  concur- 

ing  averment  of  his  appointment :  rence  of  the  secretary  of  the  treas- 

"That  on  said  September  5,  1867,  ury;  that  in  accordance  with  the 

Hiland  R.  Hulburd  was  thecomp-  said    provisions  of   said   acts,   the 

troller  of  the  currency  of  the  United  plaintiff  thereupon  took  possession 


CHAP.  VIII.] 


ACTIONS. 


189 


§  238.  Upon  the  question  of  the  degree  of  proof  as  to  his 
appointment,  which  is  required  of  a  receiver,  upon  the  trial 
of  an  action  brought  by  him  in  his  official  capacity,  it  has 
been  held,  when  the  only  proof  produced  at  the  trial  was  a 
copy  of  the  order  of  appointment,  and  the  giving  of  a  bond 
in  conformity  therewith,  that  the  pendency  of  the  original 
action  in  which  the  appointment  was  made  might  be  suffi- 
ciently proven  by  the  recitals  of  the  order,  when  the  court 
making  the  appointment  was  a  court  of  general  jurisdiction, 
the  presumption  being  entertained  that  all  things  were  done 
which  were  required  by  law  to  authorize  the  order.1  And 
it  has  been  held  to  be  unnecessary  for  the  receiver  to  pro- 
duce upon  the  trial  a  transcript  of  all  the  proceedings  in  the 
suit  in  which  he  was  appointed,  and  that  a  certified  copy  of 
the  entry  or  order  of  appointment  was  sufficient  prima  facie 
evidence  that  the  court  had  the  proper  parties  before  it 
when  the  order  was  made,  leaving  defendant  to  rebut  this 
presumption  if  possible.2 


of  the  books,  records  and  assets  of 
such  association,  of  every  descrip- 
tion, including  the  note  hereinafter 
mentioned."  Held,  on  demurrer, 
that  this  allegation  was  sufficient  as 
to  the  question  of  plaintiff's  appoint- 
ment. 

1  Potter  v.  Merchants  Bank,  28  N. 
Y.,  641 ;  Hayes  v.  Brotzman,  46 
Md.,  519.  See,  also,  Frank  v.  Mor- 
rison, 58  Md.,  423. 

2  Helmeu.  Littlejohn,  12  La.  An., 
298.  This  was  an  action  by  the  re- 
ceiver of  a  partnership,  who  upon 
the  trial,  to  prove  his  official  ca- 
pacity, introduced  a  certificate  of 
the  judge  of  the  court,  certifying 
his  appointment  in  the  action  after 
considering  the  evidence,  the 
pleadings  and  the  law.  It  was  ob- 
jected that  the  certificate  did  not 
show  that  the  judge  had  the  proper 
parties  before  liim,  and  that  the  re- 


ceiver should  have  produced  the 
entire  record.  Merrick,  C.  J. ,  says : 
"There  is  force  in  the  objection 
under  the  ordinary  rules  of  evi- 
dence. But  we  think  that  to  re- 
quire the  receiver  to  produce  in 
every  suit  he  may  be  required  to 
bring  a  transcript  of  all  the  pro- 
ceedings in  the  suit  in  which  he 
received  his  appointment,  would  in 
a  great  measure  deprive  the  parties 
of  the  benefit  of  his  appoint- 
ment, and  unnecessarily  increase 
the  cost  of  every  suit  brought  by 
the  receiver.  We  think  that  the 
certified  copy  of  the  entry  alone 
making  the  appointment  ought  to 
be  deemed  prima  facie  proof  that 
the  court  had  the  proper  parties  be- 
fore it  when  the  appointment  was 
made,  leaving  the  opposite  side  to 
rebut  the  presumption." 


190 


RECEIVERS. 


[chap.  VIII. 


§239. 
240. 
241. 

242. 

243. 

244. 


III.  Suits  by  Receivers  m  Foreign  Courts. 

Receiver's  jurisdiction ;  no  extraterritorial  right  of  action. 

The  rule  further  illustrated. 

Departure  from  the  rule  sometimes  allowed  upon  principles  of 

comity. 
Receiver  of  insolvent  corporation  may  prove  debt  in  bankruptcy 

in  another  district. 
Receiver  allowed  to  foreclose  mortgage  in  another  state. 
When  allowed  to  sue  for  property  in  another  state. 


244  a.  When  jurisdiction  of  foreign  court  not  presumed. 

§  239.  Upon  the  question  of  the  territorial  extent  of  a 
receiver's  jurisdiction  and  powers,  for  the  purpose  of  insti- 
tuting actions  connected  with  his  receivership,  the  prevail- 
ing doctrine,  established  by  the  Supreme  Court  of  the  United 
States  and  sustained  by  the  weight  of  authority  in  various 
states,  is  that  the  receiver  has  no  extraterritorial  jurisdic- 
tion or  power  of  official  action,  and  can  not,  as  a  matter  of 
right,  go  into  a  foreign  state  or  jurisdiction  and  there  insti- 
tute a  suit  for  the  recovery  of  demands  due  to  the  person 
or  estate  subject  to  his  receivership.  His  functions  and 
powers,  for  the  purposes  of  litigation,  are  held  to  be  limited 
to  the  courts  of  the  state  within  which  he  was  appointed, 
and  the  principles  of  comity  between  nations  and  states, 
which  recognize  the  judicial  decisions  of  one  tribunal  as 
conclusive  in  another,  do  not  apply  to  such  a  case,  and  will 
not  warrant  a  receiver  in  bringing  an  action  in  a  foreign 
court  or  jurisdiction.1  Where,  therefore,  upon  a  creditors' 
bill  filed  against  a  judgment  debtor  in  the  courts  of  New 
York,  a  receiver  was  appointed  of  all  the  assets  and  effects 


"'Booth  v.  Clark,  17  How.,  322; 
Farmers  &  Merchants  Insurance 
Co.  v.  Needles,  52  Mo.,  17;  Warren 
v.  Union  National  Bank,  7  Phila., 
156 ;  Hope  Mutual  Life  Ins.  Co.  v. 
Taylor,  2  Rob.  (N.  Y.),  278;  Brig- 
ham  v.  Luddington,  12  Blatchf., 
237;    Hazard   v.  Durant,  19  Fed. 


Rep.,  471.  See,  also,  Gray  don  v. 
Church,  7  Mich.,  36;  Olney  v.  Tan- 
ner, 10  Fed.  Rep.,  101,  affirmed  on 
appeal,  21  Blatchf.,  540;  Bartlett  v. 
Wilbur,  53  Md.,  485.  But  see, 
contra,  Metzner  v.  Bauer,  98  Ind., 
425.  And  see  Runk  v.  St.  John,  29 
Barb.,  585. 


CHAP.  VIII.] 


ACTIONS. 


191 


of  the  debtor,  and  the  debtor  afterward  went  into  New- 
Hampshire,  and  took  the  benefit  of  the  national  bankrupt 
act,  and  an  assignee  was  appointed  of  his  estate,  upon 
a  bill  filed  by  the  New  York  receiver,  in  the  District  of 
Columbia,  to  get  possession  of  a  fund  due  to  the  debtor,  it 
was  held  upon  appeal  that  the  court  below  properly  dis- 
missed the  bill,  since  it  could  not  recognize  the  power  of  a 
receiver  to  institute  the  proceedings  in  a  jurisdiction  other 
than  that  of  his  appointment.1     Nor  does  the  fact  that  the 


i  Booth  v.  Clark,  17  How.,  322, 
the  leading  case  upon  the  subject. 
The  court,  Mr.  Justice  Wayne  de- 
livering the  opinion,  say,  p.  338: 
"He  (the  receiver)  has  no  extra- 
territorial power  of  official  action ; 
none  which  the  court  appointing 
him  can  confer,  with  authority  to 
enable  him  to  go  into  a  foreign  ju- 
risdiction to  take  possession  of  the 
debtor's  property ;  none  which  can 
give  him,   upon    the  principle  of 
comity,  a  privilege  to  sue  in  a  for- 
eign court  or  another  jurisdiction, 
as  the  judgment  creditor  himself 
might  have  done,  where  his  debtor 
may  be  amenable  to  the  tribunal 
which  the  creditor  may  seek.     In 
those  countries  of  Europe,  in  which 
foreign  judgments  are  regarded  as 
a  foundation  for  an  action,  whether 
it  be  allowed  by  treaty  stipulations 
or  by  comity,  it  has  not  as  yet  been 
extended  to  a  receiver  in  chancery. 
In  the  United  States,  where  the 
same   rule   prevails   between   the 
states  as  to  judgments  and  decrees, 
aided  as  it  is  by  the  first  section  of 
the  fourth  article  of  the  constitu- 
tion, and  by  the  act  of  congress  of 
26th  of  May,  1790,  by  which  full 
faith  and  credit  are  to  be  given  in  all 
of  the  courts  of  the  United  States,  to 
the  judicial  sentences  of  the  differ- 
ent states,  a  receiver  under  a  cred- 


itors' bill  has  not  as  yet  been  an 
actor  as  such  in  a  suit  out  of  the 
state  in  which  he  was  appointed. 
This  court  considered  the  effect  of 
that  section  of    the    constitution, 
and  of  the  act  just  mentioned,  in 
McElmoyle   and   Cohen,   13    Pet., 
324-327.     But,  apart  from  the  ab- 
sence of  any  such  case,  we  think 
that  a  receiver  could  not  be  ad- 
mitted to  th9  comity  extended  to 
judgment  creditors  without  an  en- 
tire departure  from  chancery  pro- 
ceedings as  to  the  manner  of  his 
appointment,  the  securities  which 
are  taken  from  liim  for  the  per- 
formance of  his  duties,   and    the 
direction  which  the  court  has  over 
him  in  the  collection  of  the  estate 
of  the  debtor,  and  the  application 
and  distribution  of  them.     If    he 
seeks  to  be  recognized  in  another 
jurisdiction,  it  is  to  take  the  fund 
there  out  of  it,  without  such  court 
having  any  control  of  his  subse- 
quent action  in  respect  to  it,  and 
without  his    having  even    official 
power  to  give  security  to  the  court, 
the  aid  of  which  he  seeks,  for  his 
faithful    conduct    and  official  ac- 
countability.   All    that    could    bo 
done    upon    such    an   application 
from  a  receiver,  according  to  chan- 
cery practice,  would  be  to  transfer 
him  from  the  locality  of  his  ap- 


192  RECEIVERS.  [CHAP.  Till. 

receiver  is  appointed  by  a  federal  court  in  one  circuit,  and 
sues  as  receiver  in  the  federal  court  in  another  circuit,  alter 
the  rule,  or  entitle  him  to  maintain  the  action,  since  such 
courts  exercise  only  a  local  and  limited  jurisdiction,  and 
their  receivers  can  not  sue  in  another  territorial  jurisdiction.1 
§  210.  In  further  illustration  of  the  rule,  it  has  been  held 
in  a  garnishee  proceeding  instituted  in  the  courts  of  Penn- 
sylvania, against  a  debtor  of  a  corporation  existing  in  and 
under  the  laws  of  the  state  of  Tennessee,  where  judg- 
ment was  had  against  the  garnishee,  that  a  receiver  of  the 
Tennessee  corporation,  appointed  in  a  creditors'  suit  in  that 
state,  could  not  contest  plaintiffs'  right  to  the  verdict  ob- 
tained by  them  in  the  garnishee  suit  in  Pennsylvania.2  So 
where  an  insurance  company,  incorporated  under  the  laws 
of  Illinois,  had  passed  into  the  hands  of  a  receiver  duly  ap- 
pointed in  that  state,  it  was  held  in  Missouri,  that  the  re- 
ceiver could  not  maintain  an  action  in  the  latter  state  upon 
a  note  running  to  the  corporation,  and  that  the  suit  must  be 
brought  in  the  name  of  the  corporation  itself.3 

pointment  to  that  where  he  asks  to  ance  Co.  v.  Taylor,  2  Rob.  (N.  Y.), 
be  recognized,  for  the  execution  of  278.  In  Farmers  and  Merchants 
his  trust  in  the  last,  under  the  co-  Insurance  Co.  v.  Needles,  52  Mo., 
ercive  ability  of  that  court;  and  17,  Ewing,  J.,  observes,  p.  18: 
that  it  would  be  difficult  to  do,  "  This  is  an  action  on  a  promissory 
where  it  may  be  ashed  to  be  done,  note  alleged  to  have  been  executed 
without  the  court  exercising  its  by  defendant  to  plaintiff.  An 
province  to  determine  whether  the  amended  petition  was  filed,  which 
suitor,  or  another  person  within  alleges  substantially  that  the  insur- 
es jurisdiction,  was  the  proper  per-  ance  company  is  a  corporation  duly 
sen  to  act  as  receiver."  incorporated  under  the  laws  of  the 

!  Brigham     v.     Luddington,     12  state  of  Illinois,  with  power  to  sue, 

Blatchf.,  237.  etc. ;   that  W.    H.    Benneson  was 

-  Warren  v.  Union  National  Bank,  duly  appointed  receiver  by  the  cir- 

~  Phila.,  153.      See,  also,  Willitts  cuit  court  of  Adams  county,  in  the 

v.  Waite,  25   N.  Y.,  577;  Hunt  v.  state  of    Illinois,  with  the  rights, 

Columbian  Insurance  Co.,  55  Me.,  property  and  assets  of  the  plaintiff, 

290;   Taylor  v.  Columbian  Insur-  in  18G9,  and  gave  bond  which  was 

ance  Company,  14  Allen,  353.  duly  approved,  etc.     That  as  such 

3  Farmers  and  Merchants  Insur-  receiver  he  is  in  possession  of  the 

ai.ee  Co.  v.  Needles,  52  Mo.,  17.  property  and  effects  of  said  corpo- 

See,  also,  Ripe  Mutual  Life  Insur-  ration.     The  petition  then  alleges 


CHAP.  VIII.] 


ACTIONS. 


193 


§  211.  While,  as  is  thus  seen,  the  courts  have  generally 
denied  the  receiver's  extraterritorial  right  of  action  as 
a  question  of  strict  right,  it  has  frequently  been  recog- 
nized as  a  matter  of  comity.1  Thus,  it  has  been  held  that 
receivers  of  a  foreign  corporation,  appointed  in  other  states, 
might  sue  in  Xew  York,  in  their  official  capacity,  in  cases 
where  no  detriment  would  result  to  citizens  of  the  latter 
state,  the  privilege  of  thus  suing  being  regarded  as  based 
rather  upon  courtesv  than  upon  strict  right,  and  the  courts 
declining  to  extend  their  comity  so  far  as  to  work  detriment 
to  citizens  of  their  own  state  who  have  been  induced  to  give 
credit  to  the  foreign  corporation.2     And  in  Indiana,  it  is 


the  execution  of  the  note  by  de- 
fendant to  plaintiff,  said  corpora- 
tion, and  that  said  note  is  part  of 
the  assets  and  property  which  came 
to  the  hands  of  said  receiver,  and 
that  the  same  is  due  and  unpaid. 
.  .  It  is  admitted  by  the  demur- 
rer that  Benneson  was  duly  ap- 
pointed receiver,  and  as  such  is  in 
possession  of  the  property  and  ef- 
fects of  the  corporation,  including 
the  note  in  controversy.  And  as  it 
does  not  appear  by  any  averment 
in  the  petition  that  the  note  has 
ever  been  assigned  or  transferred 
by  the  payee  thereof,  the  corpora- 
tion only  can  maintain  an  action 
thereon,  unless  the  receiver  as  such 
has  a  right  of  action.  A  receiver 
can  not  sue  in  a  foreign  jurisdic- 
tion for  the  property  of  the  debtor." 
I  Runk  v.  St.  John,  29  Barb.,  585 ; 
Hoyt  v.  Thompson,  5  N.  Y.,  320, 
reversing  S.  C,  3  Sandf.,  416; 
Bagby  v.  A.,  M.  &  O.  R.  Co.,  86  Pa. 
St.,  291 ;  Bank  r.  McLeod,  38  Ohio 
St.,  174;  Metzner  v.  Bauer,  98  Ind., 
425;  McAlpin  v.  Jones,  10  La.  An., 
552  ;  Lycoming  Fire  Insurance  Co.  v. 
Wright,  55  Vt.,  520.  And  see  Bid- 
lack  v.  Mason,  26  N.  J.  Eq.,  230; 
13 


Hunt  v.  Columbian  Insurance  Co.,, 
55  Me.,  290;  Taylor  v.  Columbian 
Insurance  Co.,  14  Allen,  353. 

-'Runk  v.  St.  John,  29  Barb.,  585; 
Hoyt  v.  Thompson,  5  N.  Y.,  320, 
reversing  S.  C,  3  Sandf.,  416.  In 
Runk  v.  St.  John,  29  Barb.,  585, 
the  court,  Clerke,  J.,  say:  "The 
plaintiffs  are  receivers  of  a  corpo- 
ration chartered  in  the  states  of 
Pennsylvania  and  New  Jersey,  and 
were  appointed  under  the  decree 
dissolving  the  corporation,  made 
by  the  court  of  chancery  in  the 
latter  state,  and  were  confirmed  by 
an  act  of  the  legislature  of  the 
former.  The  defendant's  counsel 
denies  the  capacity  of  receivers, 
appointed  in  other  states  and  coun- 
tries, to  sue  in  the  courts  of  this 
state.  The  laws  and  proceedings  of 
other  sovereignties  have  not,  in- 
deed, such  absolute  and  inherent 
vigor  as  to  be  efficacious  here  under 
all  circumstances.  But  in  most 
instances,  they  are  recognized  by 
the  courtesy  of  the  courts  of  this 
state ;  and  the  right  of  foreign  as- 
signees or  receivers  to  collect,  sue 
for,  and  recover  the  property  of  the 
individuals    or    corporations    they 


194  RECEIVERS.  [CHAP.  VIII. 

held,  as  a  matter  of  comity,  that  receivers  duly  appointed 
and  qualified  in  another  state  may,  to  the  extent  of  their 
authority,  maintain  actions  in  the  courts  of  Indiana.1  Upon 
similar  grounds  of  comity  it  is  held  in  Pennsylvania,  that 
when  a  receiver  is  appointed  over  a  railway  in  another  state, 
the  courts  of  Pennsylvania  will  recognize  his  right  to  prop- 
erty of  the  railway  company  in  Pennsylvania,  when  not  in 
conflict  with  the  rights  of  citizens  of  that  state.  And  in 
such  case,  a  creditor  residing  in  the  state  in  which  the  re- 
ceiver is  appointed  will  not  be  permitted  by  attachment 
proceedings  in  Pennsylvania,  to  reach  the  assets  and  credits 
of  the  company  claimed  by  the  receiver.2  So  a  receiver 
over  a  railway  appointed  in  foreclosure  proceedings  in  Ken- 
tucky, with  full  power  to  take  possession  of  all  property  of 
the  company  and  to  institute  all  necessary  actions  in  his 
own  name,  may  maintain  an  action  in  Ohio,  to  recover 
rolling  stock  of  the  company  covered  by  the  mortgages, 
which  has  been  seized  in  Ohio,  by  a  Kentucky  creditor,  pend- 
ing the  application  for  the  receiver  and  before  his  appoint- 
ment.3 And  when  property  to  which  a  receiver  is  entitled 
has  been  fraudulently  removed  beyond  the  jurisdiction  of 
the  court  appointing  him  and  into  another  state,  he  has 
been  allowed  to  maintain  an  action  in  such  other  state  for 
its  recovery.4  So  a  receiver  over  a  foreign  corporation,  ap- 
pointed in  the  state  of  its  creation,  may  be  admitted  to 
defend  an  action  brought  against  the  corporation  in  New 

represent,  has  never  been  denied,  citizens  of  our  own  state,  who  have 

except  where  their  claim  came  in  been  induced  to  give  credit  to  the 

conflict  with  the  rights  of  creditors  foreign  corporation." 

in  this  state.     All  that  has  been  1Metzner  v.  Bauer,  98  Ind.,  425. 

settled  by  the  decisions  to  which  2Bagby  v.  A.,  M.  &  O.  R.  Co.,  86 

we  have  been  referred  on  tins  sub-  Pa.  St.,  291. 

ject,  is,  that  our  courts  will  not  3Bank  v.  McLeod,  38  Ohio  St., 

sustain  the  hen  of  foreign  assignees  174. 

or  receivers,  in  opposition  to  a  lien  4McAlpin  v.  Jones,  10  La.  An., 
created  by  attachment  under  our  552.     See,  also,  Paradise  v.  Farm- 
own  laws.     In  other  words,  we  de-  ers  &  Merchants  Bank,  5  La.  An., 
cline  to  extend  our  wonted  court-  710. 
esy  so  far  as  to  work  detriment  to 


CHAP.  VIII.]  ACTIONS.  105 

Jersey,  both  as  a  matter  of  comity  and  under  a  statute  sub- 
jecting foreign  corporations  to  the  provisions  of  the  state 
law.  And  when  thus  admitted  to  defend  an  action  brought 
upon  a  mortgage  given  by  the  corporation,  he  may  question 
its  validity,  being  regarded  for  that  purpose  as  the  repre- 
sentative both  of  the  corporation  and  of  its  creditors.1  It 
is  thus  apparent  that  the  exceptions  to  the  rule  denying  to 
receivers  any  extraterritorial  right  of  action  have  become 
as  well  recognized  as  the  rule  itself,  and  the  tendency  of  the 
courts  is  constantly  toward  an  enlarged  and  more  liberal 
policy  in  this  regard.  And  it  is  believed  that  the  doctrine 
will  ultimately  be  established  giving  to  receivers  the  same 
rights  of  action,  in  all  states  of  the  Union,  with  which  they 
are  invested  in  the  state  or  jurisdiction  in  which  they  are 
appointed. 

§  21-2.  It  has  also  been  held  that  a  receiver  of  an  insolv- 
ent corporation,  appointed  by  the  courts  of  a  particular 
state,  may  prove  a  debt  in  bankruptcy  due  to  the  estate 
which  he  represents,  although  the  proceedings  in  bank- 
ruptcy are  pending  in  a  federal  court  in  a  state  other  than 
that  in  which  the  receiver  was  appointed.  The  federal 
court  in  which  the  bankruptcy  proceedings  are  pending 
will,  it  is  held,  take  judicial  notice  of  the  laws  of  all  the 
states  and  of  the  powers  of  the  state  officers,  whether  exec- 
utive or  judicial.  And  the  receiver,  being  clothed  with  full 
power  to  represent  the  corporation  by  the  laws  of  the  state 
where  he  is  appointed,  stands,  by  virtue  of  his  appointment, 
in  the  shoes  of  the  corporation,  and  will  be  allowed  to 
prove  a  claim  in  bankruptcy  in  the  federal  court  of  another 
district  as  fully  as  if  vested  with  his  powers  as  receiver  by 
virtue  of  a  decree  of  a  court  within  the  district  in  which 
the  proceedings  in  bankruptcy  are  pending.2 

1  National  Trust  Co.  v.  Miller,  33  a  strong  analogy  between  the  right 

N.  J.  Eq.,  155.  of  the  receiver  in  this  case  to  prove 

-Ex parte  Norwood,  3  Biss.,  504.  the  debt  due  the  estate  he  repre- 

"  To  my  mind,"  says  Blodgett,  J.,  sents,  and  the  right  of  the  executor 

p.  512,  "  there  is,  to  say  the  least,  or  administrator  appointed  in  an- 


106 


RECEIVERS. 


[CHAT.  VIII. 


§  243.  Where  a  citizen  of  one  state  has  recognized  the 
appointment  of  a  receiver  in  another  state,  by  incurring 
obligations  to  him  in  his  official  capacity,  sufficient  to  create 
a  right  of  action,  there  would  seem  to  be  no  satisfactory 
reason,  either  upon  principle  or  authority,  why  the  receiver 


other  state  to  represent  the  right  of 
a  deceased  creditor  before  this 
court,  and  prove  a  debt  due  his 
testator  or  intestate,  and  such  right 
has  never  been  drawn  in  question. 
Under  authority  of  all  the  bank- 
rupt laws  which  have  been  passed 
by  the  congress  of  the  United 
States,  the  practice  has  been  uni- 
form, so  far  as  I  can  ascertain,  to 
allow  guardians,  executors,  admin- 
istrators, and  all  persons  acting  in 
a  representative  capacity,  to  appear 
before  the  bankrupt  court  and 
prove  the  claims  pertaining  to  the 
estate  which  they  severally  repre- 
sent. If  the  bankruptcy  proceed- 
ings in  this  case  were  pending 
before  a  United  States  court  in  the 
state  of  New  York,  there  can  be 
no  doubt  that  such  a  court  would 
recognize  the  rights  of  the  receiver 
in  this  case,  and  allow  him  to  prove 
this  claim.  Why  should  a  federal 
court  of  the  state  of  New  York 
recognize  the  authority  of  this  re- 
ceiver, appointed  under  the  laws  of 
the  state  of  New  York,  without  any 
relation  to  the  federal  laws  or  the 
bankrupt  law,  any  more  tban  this 
court  should  ?  Do  state  lines  make 
any  difference?  The  federal  courts 
take  judicial  notice  of  the  laws  of 
all  the  states  and  of  the  powers  of 
all  state  officers,  whether  executive 
or  judicial.  It  seems  to  me  it 
would  be  applying  a  very  narrow 
rule  to  the  provisions  of  the  bank- 
rupt law,  and  limit  the  usefulness 
of  that  statute  very  considerably, 


if  the  federal  courts  should  re- 
quire all  executors,  administrators, 
guardians  of  minors,  or  conserva- 
tors of  insane  or  idiotic  persons,  as 
a  condition  precedent  to  the  prov- 
ing of  their  claims  against  the  es- 
tate of  their  debtors,  to  take  out 
auxiliary  or  supplemental  letters 
of  administration  or  guardianship 
from  the  state  courts,  within  the 
jurisdiction  of  the  court  where  the 
bankruptcy  proceedings  were  pend- 
ing. The  bankrupt  law  is  national 
in  its  application.  It  is  intended 
to  serve  all  creditors  alike,  and 
gives  all  creditors  acting  in  a  rep- 
resentative capacity,  resident  out 
of  the  district,  as  well  as  those 
within  the  district  wherein  the 
proceedings  are  pending,  all  the 
rights  to  prove  their  debts  which 
natural  persons  might  exercise, 
and  it  seems  to  me  that  this  court 
would  do  gross  injustice  to  the 
principles  of  the  law  to  hold  that 
this  receiver,  clothed  as  he  is  with 
full  powers,  by  the  laws  of  the 
state  of  New  York,  to  represent 
the  estate  of  the  Lorillard  Insur- 
ance Company,  and  standing,  by 
virtue  of  the  decree  of  the  supreme 
court  of  the  state  of  New  York,  in 
the  shoes  and  place  of  the  Lorillard 
Fire  Insurance  Company,  should 
not  be  allowed  to  prove  his  debt 
here  as  fully  as  if  he  had  been 
vested  with  those  powers  by  virtue 
of  a  decree  from  any  court  within 
this  district." 


CHAP.  VIII.]  ACTIONS.  197 

should  not  be  allowed  to  maintain  his  action  in  the  state 
where  such  citizen  resides.  It  has  accordingly  been  held, 
where  a  mortgage  of  property  situated  in  one  state  was  ex- 
ecuted to  receivers  appointed  by  the  courts  of  another  state, 
and  the  receivers  resigned,  and  successors  were  duly  ap- 
pointed, that  such  successors  to  the  original  receivers  might 
maintain  an  action  in  their  own  names  to  foreclose  the 
mortgage  in  the  state  where  the  premises  were  located,  and 
that  the  use  of  the  word  receivers,  in  such  case,  was  merely 
a  description  of  the  person.1 

§  244.  When  the  rights  of  the  receiver  do  not  rest  merely 
upon  his  appointment  by  the  courts  of  another  state,  but,  in 
addition  thereto,  and  for  the  purpose  of  carrying  out  the 
objects  of  the  receivership,  the  defendant  over  whom  he  is 
appointed  has  made  an  assignment  of  all  his  property  to  the 
receiver,  sufficient  to  pass  the  title  to  real  estate,  which  as- 
signment is  recorded  in  the  proper  recorders  office  in 
another  state  where  real  property  of  the  defendant  is  situ- 
ated, the  receiver  may,  by  virtue  of  such  assignment,  bring 
an  action  in  that  jurisdiction  concerning  the  property.  In 
such  case,  he  sues,  not  strictly  in  his  official  capacity  as 
receiver  by  virtue  of  his  appointment  in  the  former  state, 
but  in  his  capacity  as  assignee,  and  his  designation  as  re- 
ceiver may  be  treated  as  a  descriptio  jpersonce.  And  he  need 
not  go  behind  the  assignment  and  prove  the  prior  proceed- 
ings, or  any  order  of  the  court  appointing  him,  but  the 
matters  in  the  assignment  will  be  taken  as  true  until  dis- 
proven.2  So  when  a  court,  having  jurisdiction  of  the  par- 
ties and  of  the  subject-matter,  and  having  the  property  in 
controversy  within  its  control,  appoints  a  receiver  over  such 
property,  who  reduces  it  to  actual  possession,  and  sends  it 
under  the  order  of  the  court  into  another  state  for  sale, 
where  it  is  attached,  the  receiver  may  maintain  replevin  in 
the  latter  state  to  recover  the  property.  And  in  such  case, 
third  persons,  not  parties  to  the  original  suit  in  which  the 

1  Iglehart  v.  Bierce,  36  HI.,  133.  ZGraydon  v.  Church,  7  Mich.,  36. 


198  RECEIVERS.  [CHAP.  VIII. 

receiver  was  appointed,  can  not  avail  themselves  of  irregu- 
larities in  his  appointment.1  But  the  courts  of  Texas  have 
refused  to  recognize  a  title  acquired  by  a  receiver  appointed 
in  another  state  to  real  estate  in  Texas,  as  against  creditors 
in  that  state,  upon  the  ground  that  the  receiver  has  no  offi- 
cial capacity  or  power  beyond  the  jurisdiction  of  the  court 
creating  him.  Thus,  when  attaching  creditors  in  Texas 
levied  upon  lands  of  a  Tennessee  corporation,  over  which  a 
receiver  had  been  appointed  in  the  latter  state,1  and  to  whom 
a  conveyance  of  the  lands  had  been  executed  under  his  re- 
ceivership, it  was  held  that  the  title  thus  acquired  could  not 
prevail  as  against  the  attachment  proceedings.2 

§  214  a.  In  an  action  brought  by  a  receiver  deriving  his 
appointment  from  the  courts  of  another  state,  if  the  juris- 
diction of  the  court  appointing  him  is  denied  by  answer, 
and  no  proof  is  offered  as  to  the  powers  of  such  court,  either 
from  the  laws  of  the  state  or  otherwise,  its  jurisdiction  to 
appoint  a  receiver  will  riot  be  presumed,  when  it  does  not 
appear  from  the  record  whether  it  was  a  court  of  general 
or  of  special  jurisdiction.3 

iCagill  v.  "Wooldridge,  8  Baxter,  2Moseby  v.  Burrow,  52  Tex.,  396. 
580.  AndseeC.,M.  &  St.  P.  R.  Co.  SKronberg  v.  Elder,  18  Kan., 
v.  Packet  Co.,  108  111.,  317.  150. 


CHAP.  VIII.]  ACTIONS.  199 


IT.  Defenses  to  Actions  by  Receivers. 

§  245.  General  rule ;  same  defenses  available  as  against  original  party, 

246.  Defense  of  fraud  not  available  where  all  parties  participated. 

247.  General  rule  as  to  set-offs ;  its  applications. 

248.  Rule  applied  to  suit  by  receiver  of  insolvent  corporation. 

249.  Set-off  accruing  after  receiver's  appointment  not  allowed ;  coun- 

ter-claim for  services  rendered  receiver. 

250.  Set-off  inadmissible  when  receiver  represents  creditors. 

251.  Suit  to  recover  notes  of  bank  illegally  transferred;  counter- 

claim denied. 

252.  Suit  by  receiver  of  insolvent  debtor  on  notes ;  judgment  against 

receiver  not  a  set-off. 

253.  Rent  due  on  premises  used  by  partnership  not  a  set-off  in  suit 

by  receiver  of  firm. 
253  a.  Notes  not  attached  in  another  state. 

§  245.  Since  the  appointment  of  a  receiver  in  limine 
does  not  affect  any  questions  of  right  involved  in  the  action, 
and  does  not  change  any  contract  relations  or  rights  of  ac- 
tion existing  between  parties,1  it  follows  as  a  general  rule 
that  in  ordinary  actions  brought  by  a  receiver  in  his  official 
capacity,  to  recover  upon  an  obligation  or  demand  due  to 
the  person  or  estate  which  has  passed  under  the  receiver's 
control,  the  defendant  may  avail  himself  of  any  matter  of 
defense  which  he  might  have  urged  had  the  action  been 
brought  by  the  original  party,  instead  of  by  his  receiver.2 
For  example,  when  a  banking  corporation  advances  money 
to  a  depositor,  upon  his  agreement  that  his  balance  on  de- 
posit, and  that  of  the  firm  of  which  he  is  a  member,  shall 
be  applied  in  payment  of  the  advances,  such  agreement 
amounts  to  an  equitable  appropriation  of  the  balances,  and 
if  the  bank  passes  into  the  hands  of  a  receiver  before  the 

i  Williams  v.  Babcock,  25  Barb.,  656.     See,  also,  Williams  v.    Bab- 

109;  Bell  v.  Shibley,  33  Barb.,  610.  cock,  25    Barb.,    109;    Thomas  v. 

And  see  Savage  v.  Medbury,  19  N.  Whallon.   31   Barb.,    172;    Colt  v. 

Y.,  32;  Shaughnessy  v.  The  Rens-  Brown,    12  Gray,   233;  Van  Wag- 

selaer  Insurance  Co.,  21  Barb.,  605.  oner  v.  Paterson  Gas  Light  Co.,  3 

2Moise  v.  Chapman,  24  Ga.,  249;  Zab.,  283;  Berry  v.  Brett,  6  Bosw., 

Devendorf  v.  Bcardsley,  23  Barb.,  627;  Hyde  v.  Lynde,  4  N.  Y.,  387. 


200  EECEIVEES.  [CHAP.  TUT. 

balances  are  actually  thus  applied,  and  an  action  is  brought 
for  the  receiver's  use  upon  the  note  given  for  such  advances, 
the  defendant  is  entitled  to  have  such  balances  deducted 
from  the  amount  due,  to  the  same  extent  as  if  they  had  act- 
ually been  thus  applied  on  the  books  of  the  bank.1 

§  246.  Where,  however,  the  defense  relied  upon  in  an 
action  brought  by  a  receiver  of  a  corporation  is  that  the 
note  or  obligation  upon  which  the  receiver  sues  was  given 
without  consideration,  and  in  aid  of  a  fraudulent  and  illegal 
transaction,  such  defense  can  not  be  maintained  if  it  is  ap- 
parent that  all  parties  to  the  transaction,  including  the 
defendant  himself,  were  participants  in  the  fraud.2 

§  247.  The  question  as  to  the  grounds  which  may  be 
urged  in  defense  of  actions  brought  by  receivers  is  most  fre- 
quently presented  in  cases  where  it  is  sought  to  interpose  a 
demand  due  to  the  defeudant  by  way  of  set-off  to  the  re- 
ceiver's action.  The  general  principle  governing  this  sub- 
ject seems  to  be,  as  regards  demands  or  choses  in  action  in 
favor  of  the  original  party  over  whom  a  receiver  is  ap- 
pointed, that  the  receiver  takes  such  choses  in  action  subject 
to  any  equitable  set-offs  which  defendant  might  have  urged 
against  the  original  party  holding  the  legal  title.3  Thus, 
when  receivers  of  a  banking  corporation  institute  an  action 
upon  a  promissory  note  or  bill  of  exchange  due  to  the  bank, 
the  defendant  will  be  allowed  to  set  off  against  such  demand 
bills  and  notes  of  the  bank,  received  by  him  in  the  ordinary 
course  of  business  before  the  insolvency  of  the  bank,  or  be- 
fore the  injunction  sequestrating  and  setting  apart  the  as- 
sets of  the  bank  for  the  benefit  of  its  creditors.4  But  the 
bills  of  the  bank  received  after  such  injunction  will  not  be 

1  Chase  v.  Petroleum  Bank,  6G  Pa.  Van  Wagoner  v.  Paterson  Gas 
St.,  169.  Light  Co.,  3  Zab.,  283.     And  see, 

2  Farmers  &  Mechanics  Bank  v.  further,  as  to  set-offs  which  may  be 
Jenks,  7  Met.,  592.  allowed   by  receivers  of    banking 

•»  Colt  v.    Brown,   12  Gray,   233.  corporations,  State  Bank  v.  Eeceiv- 

See,  also,  Hade  v.  McVay,  31  Ohio  ers  of  Bank  of  New  Brunswick,  2 

St.,  231.  Green  Ch.,  266. 

*  Colt  v.  Brown,   12  Gray,   233; 


>5 


cnAi\  VIII.]  ACTIONS.  201 

allowed  as  a  set-off.1  In  accordance  with  the  same  general 
principle,  it  is  held  that  in  an  action  by  the  receiver  of  an 
insolvent  insurance  company,  to  recover  upon  a  premium 
note  given  for  a  policy  of  insurance,  the  maker  of  the  note 
may  set  off  a  demand  in  his  favor  against  the  company, 
which  was  liquidated  before  the  receiver's  appointment.2 
But  in  an  action  by  a  receiver  of  an  insolvent  bank  to  re- 
cover upon  a  demand  due  to  the  bank,  if  defendant  seeks  to 
set  off  a  demand  against  the  bank,  the  burden  of  proof  rests 
upon  him  to  show  that  such  demand  accrued  in  his  favor 
before  the  receivership.3  And  in  such  case,  a  cause  of 
action  or  demand  against  the  bank,  which  is  assigned  to  the 
defendant  after  the  filing  of  the  bill  for  a  receiver,  or  after 
his  appointment,  can  not  be  set  off  against  the  receivers 
action.4 

§  248.  The  general  rule  above  stated  as  to  set-offs  in  this 
class  of  actions  is  recognized  in  Eew  Jersey,  in  actions 
brought  by  a  receiver  of  an  insolvent  corporation  appointed 
under  a  statute  for  the  prevention  of  frauds  by  incorporated 
companies,  the  statute  fixing  the  functions  of  such  receivers 
and  authorizing  them  to  allow  just  set-offs  in  all  cases  where 
it  shall  appear  that  they  ought  to  be  allowed  according  to 
law  or  equity.  The  transfer  of  the  property  from  the  cor- 
poration to  its  receivers  in  such  case,  being  by  operation  of 
law,  passes  all  rights  of  the  corporation  in  the  same  condi- 
tion, and  subject  to  the  same  equities,  as  when  held  by  the 
corporation  itself.  And  when  the  receivers  of  an  insolvent 
banking  corporation,  appointed  under  such  a  statute,  sue 
upon  a  note  due  to  the  bank,  the  makers  of  such  note  may 
set  off  against  the  demand  the  amount  of  their  deposit  in 
the  bank  at  the  time  of  its  insolvency.5     The  rule  is  other- 

i  Colt  v.  Brown,  12  Gray,  233.  Light  Co.,  3  Zab.,  283.     "Theas- 

2  Berry  v.  Brett,  6  Bosw.,  627.  signment    to    the    receiver,"    says 

s Smith  v.  Mosby,  9  Heisk.,  501.  Green,   C.   J.,   p.   292,   "being  by 

4  Lanier  v.  Gayoso  Savings  Insti-  operation  of  law,  passes  the  rights 

tution,  9  Heisk.,  500;  Van  Dyck  v.  and    property  of    the  corporation 

McQuade,  85  N.  Y.,  616.  precisely  in  the  same  plight  and 

s  Van  Wagoner  v.  Paterson  Gas  condition,  and  subject  to  the  same 


202 


EECEIVEKS. 


[chap.  vm. 


wise,  however,  when  the  debts  do  not  exist  between  the 
parties  in  the  same  right  or  capacity.  Thus,  when  the 
action  is  brought  by  a  receiver  of  an  insolvent  bank 
against  a  shareholder  to  recover  an  unpaid  subscription  to 
capital  stock,  the  defendant  can  not  set  off  the  amount  of 
his  individual  deposit  in  the  bank,  since  the  capital  stock  is 
a  trust  fund  for  the  benefit  and  security  of  creditors,  and  to 
allow  a  shareholder  to  set  off  a  debt  due  to  him  from  the 
bank  in  such  case  would  give  him  preference  as  a  creditor.1 
§  249.  It  is  also  to  be  observed  that  the  rule  recognizing 
such  set-offs  to  actions  brought  by  receivers  as  might  have 
been  urged  in  defense  of  the  action  as  between  the  original 
parties,  does  not  extend  to  demands  in  defendant's  favor 
accruing  after  the  receiver's  appointment.  And  in  an  action 
upon  a  promissory  note,  brought  by  a  receiver  of  the  payee 
ao-ainst  the  maker,  the  defendant  will  not  be  allowed  to  set 
off  a  demand  alleged  to  be  due  to  him  from  the  payee,  but 
which  had  not  accrued  before  maturity  of  the  note,  or  be- 
fore the  receiver  was  appointed.2  But  in  an  action  brought 
by  a  receiver  in  his  official  capacity  to  recover  upon  a  note 
due  to  the  estate  over  which  he  is  appointed,  the  defendant 
is  entitled  by  way  of  counter-claim  to  a  demand  for  services 


equities,  as  the  corporation  held 
thern.  The  receivers  are  not  as- 
signees for  a  valuable  consideration, 
in  the  ordinary  sense  of  that  term, 
but  are  regarded  as  voluntary  as- 
signees and  personal  representa- 
tives of  the  corporation.  The 
statute,  moreover,  in  cases  of  mu- 
tual dealing  between  tbe  corpora- 
tion and  any  other  person  or 
persons,  expressly  authorizes  the 
receivers  to  allow  just  set-offs  in 
favor  of  such  persons  in  all  cases  in 
which  it  shall  appear  to  the  receiv- 
ers that  the  same  ought  to  be  al- 
lowed according  to  law  and  equity. 
The  claim  of  the  defendants  in  this 
case  does  not,   as  has  been   seen 


from  technical  considerations,  con- 
stitute a  set-off  at  law.  But  as 
the  claim  was  a  clear,  legal  and 
equitable  set-off  against  the  bank 
at  the  time  of  the  insolvency,  and 
as  tbe  receivers  took  the  rights  and 
property  of  the  corporation  in  the 
same  plight  and  condition,  and  sub- 
ject to  the  same  equities,  that  the 
bank  held  them,  it  is  clear  that  the 
claim  of  the  defendants  is  an  equi- 
table set-off  against  the  demand  of 
the  receivers." 

i  Williams  v.  Traphagen,  38  N. 
J.  Eq.,  57. 

2  United  States  Trust  Co.  of  New 
York  v.  Harris,  2  Bosw.,  75. 


CHAP.  VIII.]  ACTIONS.  203 

which  he  has  rendered  to  the  receiver,  under  an  employment 
by  the  latter  for  the  benefit  of  the  estate.1  And  one  who 
has  rendered  services  to  a  corporation  pending  an  action  for 
the  appointment  of  a  receiver  over  its  property,  but  before 
the  property  passes  into  the  receiver's  hands,  may  set  off  the 
value  of  such  services  against  a  demand  due  from  him  to 
the  corporation  prior  to  the  receivership,  but  can  not  set  off 
an  account  for  services  rendered  after  the  receivership.2 

§  250.  "Where  the  receiver,  for  the  purposes  of  the  litiga- 
tion, is  the  representative,  not  of  the  title  or  interest  of  the 
original  party,  but  of  creditors  for  whose  benefit  he  sues,  a 
different  principle  prevails,  and  in  such  case  no  set-off  can 
be  allowed  in  favor  of  the  defendant  upon  a  demand  against 
the  original  party,  which  is  not  binding  against  the  receivers 
in  the  capacity  in  which  they  act.  Thus,  in  an  action 
brought  by  receivers  of  an  insolvent  corporation  against  a 
shareholder,  for  the  recovery  of  illegal  dividends  paid  by 
the  corporation  while  in  a  condition  of  insolvency,  the  de- 
fendant can  not  set  off  against  the  demand  of  the  receivers 
a  claim  growing  out  of  independent  matters  between  the 
corporation  and  himself.  The  foundation  of  the  action 
being  the  illegal  payment  of  dividends  in  fraud  of  the  cred- 
itors, and  the  reparation  sought  being  the  restoration  of  the 
fund  for  the  creditors'  benefit,  the  receiver  is  regarded  as 
the  representative  of  the  creditors  and  not  of  the  corpora- 
tion, and  hence  the  defense  is  unavailable.3 

§  251.  It  is  also  held,  that  in  an  action  by  receivers  of 
an  insolvent  banking  corporation,  to  recover  notes  of  the 
bank  illegally  transferred  to  one  of  its  directors  knowing 
the  insolvent  condition  of  the  bank,  the  defendant  can  not 
be  allowed  by  way  of  counter-claim  the  amount  actually 
paid  by  him  for  the  notes,  since  such  defense  rests  upon  his 
own  illegal  conduct.4 

§  252.  In  an  action  by  the  receiver  of  an  insolvent 
debtor,  appointed  in  behalf  of  creditors,  upon  notes  due  to 

1  Davis  v.  Stover,  58  N.  Y.,  473.  3  Osgood  v.  Ogden,  4  Keyes,  70. 

-Cook  v.  Cole,  55  Iowa,  70.  ^Gillet  v.  Phillips,  13  N.  Y.,  114. 


204  RECEIVERS.  [CHAP.  VUL 

the  debtor,  the  maker  of  such  notes  can  not  set  off  against 
the  action  a  judgment  which  he  has  obtained  against  the 
receiver  upon  a  note  of  the  debtor,  since  this  would  virtually 
give  the  defendant  a  preference  over  the  other  creditors ; 
and  the  judgment  in  defendant's  favor  against  the  receiver 
is  treated  as  being  only  a  legal  determination  of  the  amount 
and  validity  of  defendant's  demand,  and  not  that  it  shall 
take  preference  over  demands  of  other  creditors.1 

§  253.  Where  the  assets  of  a  partnership  pass  into  the 
hands  of  a  receiver  to  await  a  settlement  between  the  part- 
ners, and  are  sold  by  him  under  order  of  the  court,  in  an 
action  brought  by  the  receiver  to  recover  the  purchase 
price,  the  purchaser  can  not  set  off  a  claim  or  demand  which  he 
himself  holds  against  the  partnership,  as  for  rent  of  premises 
occupied  by  the  firm ;  since  to  allow  such  a  set-off  would  be 
to  give  the  defendant  a  preference  over  other  creditors.2 

§  253  a.  When  receivers  over  an  insolvent  corporation 
in  New  York,  receive  as  part  of  the  assets  of  the  corporation 
notes  due  from  a  resident  of  Massachusetts,  it  is  no  defense 
to  an  action  brought  by  the  receivers  upon  such  notes  in 
New  York,  that,  after  the  receivers'  appointment,  the  notes 
were  attached  in  an  action  brought  by  a  creditor  of  the 
corporation  in  Massachusetts.  In  such  case,  the  notes  being 
transferred  to  receivers  in  New  York,  for  the  benefit  of 
creditors,  they  are  not  subject  to  the  jurisdiction  of  the 
courts  of  another  state.3 

1  Clark  v.  Brock  way,  3  Keyes,  13 ;  3  Osgood  v.  Maguire,  61  N.  Y., 
S.  C,  1  Ab.  Ct.  Ap.  Dec,  351.  524. 

2  Singerly  v.  Fox,  75  Pa.  St.,  112. 


CHAP.  VIII.]  ACTIONS.  205 


"V.  Actions  against  Receivers. 

§  254.    Receiver  can  not  be  sued  without  leave  of  court. 
254a.  Leave  to  sue  jurisdictional;  court  may  fix  forum. 
254 b.  Usual  practice  by  petition;  trial  by  jury;  action  for  tort. 

255.  Court  itself  may  give  relief  on  motion,  or  may  authorize  suit ; 

receiver  of  railway ;  liability  not  a  personal  one. 

256.  Courts  may  enjoin  unauthorized  suits  against  their  receivers; 

illustrations. 

257.  Suit  against  receiver  for  mere  trespass  not  enjoined. 

258.  Receiver  as  a  party  to  action  against  original  debtor. 

259.  Effect  of  receiver  over  one  defendant  in  foreclosure  suit. 

260.  Receivers  of  corporations  as  parties  defendant. 

261.  Receiver's  appearance  waives  objection  as  to  want  of  leave. 

262.  Courts  will  not  enjoin  their  own  receivers. 

263.  Rival  claimants  against  receiver ;  bill  of  interpleader. 

264.  Receivers  not  allowed  to  waive  defense ;  right  of  appeal. 

265.  Notice  of  application  for  leave  to  sue  receiver. 

266.  English  practice  as  to  defending  actions  of  ejectment  against 

receivers. 

267.  When  receiver  not  entitled  to  costs. 

268.  Suit  against  receiver  not  barred  by  his  discharge. 

§  254.  A  receiver  being  an  officer  of  the  court,  acting 
under  its  direction,  and  in  all  things  subject  to  its  authority, 
it  is  contrary  to  the  established  doctrine  of  courts  of  equity 
to  permit  him  to  be  made  a  party  defendant  to  litigation, 
unless  by  consent  of  the  court  appointing  him.  And  it  is 
in  all  cases  necessary  that  a  person  desiring  to  bring  suit 
against  a  receiver  in  his  official  capacity,  should  first  obtain 
leave  of  the  court  by  which  he  was  appointed,  since  the 
courts  will  not  permit  the  possession  of  their  officers  to  be 
disturbed  by  suit  or  otherwise,  without  their  consent  and 
permission.1     The  rule  is  established  for  the  protection  of 

J  Taylor  v.  Baldwin,  14  Ab.  Pr.,  Breckenridge,  96  Ind.,  69;  Melendy 

166 ;  Wray  v.  Hazlett,  6  Phila.,  155 ;  v.  Barbour,  78  Va.,  544 ;  Barton  v. 

DeGrootr.  Jay,  30  Barb. ,  483 ;  S.  C,  Barbour,  104  U.  S.,  126,  affirming 

0  Ab.  Pr.,  364;  Miller  v.  Loeb,  64  S.  C,  3  Mac  Arthur,  212;  Searle  v. 

Barb.,  454  ;  Randfield  v.  Randfield,  Choate,  25  Ch.  D.,  723;  Graffenried 

8  DeG.,  F.  &  J.,  766,  reversing  S.  v.  Brunswick  &  Albany  R.  Co.,  57 

('.,   1  Dr.    &  Sm.,   310;    Keen  v.  Ga.,  22;  Thompsons.  Scott,  4  Dill., 


206 


RECEIVERS. 


[chap.  VIII. 


receivers  against  unnecessary  and  expensive  litigation,  and 
in  most  instances  a  party  aggrieved  may  have  ample  relief 
by  application  on  motion  to  the  court  appointing  the  re- 
ceiver. And  when  an  action  is  instituted  against  a  receiver 
in  his  official  capacity,  without  first  obtaining  leave  of  the 
court,  the  plaintiff  in  such  action  is  guilty  of  a  contempt  of 
court  and  will  be  punished  accordingly.1  It  is  not,  how- 
ever, usual  for  the  court  to  refuse  leave  to  a  person  upon 
application  to  contest  a  right  which  he  claims  as  against  a 
receiver,  unless  it  is  perfectly  apparent  that  there  is  no  foun- 
dation for  the  demand.2  But  to  warrant  a  court  in  granting 
leave  to  sue  its  receiver,  the  applicant  should  show  by  his 
petition  at  least  a  probable  ground  of  recovery ;  and  when, 
upon  the  face  of  his  petition,  it  is  apparent  that  he  has  no 
cause  of  action,  leave  will  not  be  granted.3    And  it  is  neces- 


508;  S.  C,  3  Central  Law  Journal, 
737;  Kennedy  v.  I.,  C.  &L.  R.  Co., 
3  Fed.  Rep.,  97;  S.  C,  2  Flippin, 
704;  Meredith  Village  Savings 
Bank  v.  Simpson,  22  Kan.,  414. 
See,  also,  Evelyn  v.  Lewis,  3  Hare, 
472;  In  re  Persse,  8  Ir.  Eq.,  Ill; 
Parr  v.  Bell,  9  Ir.  Eq.,  55;  Tink  v. 
Rundle,  10  Beav.,  318;  Payne  v. 
Baxter,  2  Term.  Ch.,  517.  See,  con- 
tra, Kinney  v.  Crocker,  18  Wis., 
74;  Paige  v.  Smith,  99  Mass.,  395; 
St.  Joseph  &  Denver  City  R.  Co.  v. 
Smith,  19  Kan.,  225. 

i  Thompson  v.  Scott,  4  Dill.,  508; 
S.  C,  3  Central  Law  Journal,  737; 
Taylor  v.  Baldwin,  14  Ab.  Pr.,  166; 
DeGroot  v.  Jay,  30  Barb.,  483;  S. 
C,  9  Ab.  Pr.,  364.  In  the  latter 
case,  as  reported  in  30  Barb. ,  483, 
the  court  observe,  p.  484:  "The 
receiver  is  the  officer  of  the  court, 
and,  by  the  well-settled  practice, 
permission  of  the  court  was  neces- 
sary to  warrant  an  action  against 
him.  This  rule  is  essential  for  the 
protection  of  receivers  against  un- 


necessary and  oppressive  litigation, 
and  should  be  carefully  main- 
tained. It  is  a  contempt  of  the 
court  to  sue  a  receiver  without  such 
permission.  In  most  cases  of 
claims  against  a  receiver,  or  the 
fund  or  property  in  his  hands,  the 
remedy  by  special  motion  is  ade- 
quate. Any  person  having  such  a 
claim  may  resort  to  this  summary 
remedy.  The  fund  or  property 
being  held  by  the  court,  by  its  re- 
ceiver, in  trust  for  those  entitled  to 
it,  or  to  be  paid  out  of  it,  the  court 
may  administer  justice  to  claim- 
ants without  suit,  upon  special  ap- 
plication. In  the  present  case,  all 
the  relief  sought,  to  which  the 
plaintiff  is  entitled,  might  be  ob- 
tained in  that  mode.  And  that 
mode  is  commended  by  considera- 
tions of  economy  as  well  as  expe- 
dition." 

2Randfield  v.  Randfield,  3  DeG., 
F.  &  J.,  766,  reversing  S.  C,  1  Dr. 
&  Sm.,  310. 

3  Jordan  v.  "Wells,  3  Woods,  527. 


CHAP.  VIII.]  ACTIONS.  207 

sary  to  aver  in  the  complaint  or  declaration  against  a  re- 
ceiver, that  leave  of  court  has  been  granted  to  bring  the 
action,  and  the  absence  of  such  an  averment  is  fatal  upon 
demurrer.1 

§  254  a.  The  authorities  are  far  from  reconcilable  upon 
the  question  whether  the  want  of  leave  to  bring  an  action 
against  a  receiver  is  jurisdictional,  and  therefore  fatal  to 
maintaining  the  action,  or  whether  it  is  merely  an  omission, 
which  will  subject  the  party  suing  without  such  leave  to 
proceedings  for  contempt  of  the  court  appointing  the  re- 
ceiver, but  without  impairing  the  jurisdiction  of  that  court 
to  proceed  with  and  determine  the  cause.  The  weight  of 
authority,  however,  seems  to  support  the  proposition  that 
leave  to  sue  the  receiver  is  jurisdictional  in  its  nature,  and 
that  its  omission  is  fatal  to  maintaining  the  action.2  And 
upon  an  application  to  the  court  for  leave  to  sue  its  receiver, 
the  court  may  determine  the  forum  in  which  the  action 
shall  be  brought.  It  may  therefore  grant  leave  to  sue  the 
receiver  in  its  own  jurisdiction,  and  may  refuse  to  permit 
him  to  be  sued  in  another  court.  And  when  the  order  is 
made  in  this  form,  and  the  action  is  brought  in  the  court  by 
which  the  receiver  was  appointed,  but  the  plaintiff  then 
files  a  petition  and  bond  for  the  removal  of  the  cause  to  a 
federal  court,  it  is  not  error  for  the  former  court,  of  its  own 
motion,  to  revoke  the  permission  to  sue  its  receiver  and  to 
dismiss  the  action.3 

1  Keen  v.  Breckenridge,  96  Ind.,  controversies  to  which  he  is  a 
69.  party,  it  does  so  by  acting  directly 

2  Barton  v.  Barbour,  104  U.  S.,  upon  the  parties  to  such  contro- 
126,  affirming  S.  C,  3  MacArthur,  versies,  and  not  by  challenging  the 
212;  Keenu.  Breckenridge,  96  Ind.,  jurisdiction  of  other  tribunals. 
69.  See,  contra,  Kinney  v.  Crocker,  When,  therefore,  a  receiver  is  sued 
18  Wis.,  74;  St.  Joseph  &  Denver  in  a  court  other  than  that  by  which 
City  R.  Co.  v.  Smith,  19  Kan.,  225.  he  was  appointed,  an  averment  in 
In  the  case  last  cited  it  is  held  that  his  answer  that  he  is  such  receiver 
the  ordinary  jurisdiction  of  the  raises  no  question  as  to  the  juris- 
courts  is  not  taken  away  or  im-  diction  of  the  court  in  which  the 
paired  by  the  appointment  of  a  re-  action  is  brought. 

ceiver  by  another  court,  and  while  3  Meredith  Village  Savings  Bank 
that  court  may  draw  to  itself  all    v.  Simpson,  22  Kan.,  414. 


208 


RECEIVERS. 


[chap.  VIII. 


§  254  h.  The  more  common  practice,  and  that  which  has 
been  generally  commended  by  the  courts,  is  to  hear  and  de- 
termine all  rights  of  action  and  demands  against  a  receiver 
by  petition  in  the  cause  in  which  he  was  appointed,  without 
remitting  the  parties  to  a  new  and  independent  suit.  And 
it  rests  wholly  within  the  discretion  of  the  court  to  grant 
leave  to  bring  an  independent  action  against  its  receiver,  or 
to  determine  the  controversy  upon  petition  in  the  original 
cause,  directing,  if  necessary,  an  issue  to  be  tried  by  a  jury 
as  to  questions  of  fact  or  of  damages.1  And  the  right  to  a 
trial  by  jury  in  such  cases  is  wholly  discretionary  with  the 
court,  which  may  direct  the  issues  of  fact  to  be  tried  by  a 
jury,  or  may  refer  them  to  a  master  for  determination.2 
And  it  is  proper  for  the  court,  when  application  is  made  for 
leave  to  sue  its  receiver,  to  investigate  the  subject-matter  of 
the  petition,  and  if  it  appears  that  the  case  is  free  from  dif- 
iiculty,  or  that  it  involves  no  question  which  must  neces- 
sarily be  determined  by  an  action  at  law,  the  court  may 
itself  determine  the  matter  upon  petition.3  So  if  an  equi- 
table right  or  title  is  asserted  in  property  which  is  in  the 
custody  of  a  receiver,  the  court  will  not  ordinarily  permit 
an  action  to  be  brought  against  him,  but  will  require  the 
claimant  to  proceed  by  petition.4  And  persons  having  a 
claim  or  hen  upon  a  fund  in  a  receiver's  hands  should  assert 
such  claim  by  petition,  rather  than  by  an  action  against  the 
receiver.5  If,  however,  the  cause  of  action  is  in  tort,  it  is 
regarded  as  the  more  appropriate  practice  to  apply  for  leave 
to  bring  an  action,  rather  than  to  submit  the  matter  upon 
petition.6 

§  255.  "While  it  is  the  more  commonly  recognized  prac- 
tice for  persons  having  claims  or  demands  against  an  estate, 


1  Melendy  v.  Barbour,  78  Va. ,  544 ; 
Kennedy  v.  I.,  C.  &  L.  R.  Co.,  3 
Fed.  Rep.,  97;  S.  C,  2  Flippin, 
704. 

'^Kennedy  v.  I.,  C.  &  L.  R.  Co.,  3 
Fed.  Rep.,  97;  S.  C,  2  Flippin, 
704. 


3  Lehigh  C.  &  N.  Co.  v.  Central 
R.  Co.,  38  N.  J.  Eq.,  175. 

4  Porter  v.  Kingman,  120  Mass., 
141. 

5  Olds  v.  Tucker,  35  Ohio  St.,  581. 
GPalys  v.  Jewett,  32  N.  J.  Eq., 

302. 


CHAP.  VIII.]  ACTIONS.  209 

over  which  a  receiver  is  appointed,  to  apply,  by  petition  or 
otherwise,  to  the  court  appointing  the  receiver  for  the  re- 
lief desired,  yet  this  method  of  obtaining  redress  does  not 
exclude  the  remedy  by  action  against  the  receiver,  in  cases 
where  an  action  is  proper.  And  when  complaint  is  made 
against  a  receiver  for  injuries  sustained  by  reason  of  neg- 
ligence in  the  discharge  of  his  official  duties,  the  court  ap- 
pointing him  may  either  take  cognizance  of  the  complaint 
and  administer  justice  between  the  parties,  or  it  may  permit 
the  party  aggrieved  to  bring  his  action  for  the  injury  sus- 
tained. And  in  case  of  an  action  brought  against  the  re- 
ceiver of  a  railwa}7  corporation,  for  injuries  alleged  to  have 
been  sustained  through  negligence  of  employees  in  the 
management  of  the  road,  the  receiver  can  not  object  to  the 
action  that  he  is  a  public  officer,  and  as  such  not  responsible 
in  his  official  capacity  for  the  negligence  of  his  employees.1 
But  it  may  be  observed  generally,  that  in  actions  instituted 
against  receivers  in  their  official  capacity,  the  receiver  incurs 
no  personal  liability,  and  whatever  judgment  is  obtained 
against  him  should  be  so  entered  as  to  be  enforced  only  out 
of  funds  properly  chargeable  to  him  in  the  capacity  of 
receiver.2 

§  256.  Courts  of  equity  are  so  jealous  of  permitting  any 
unauthorized  interference  with  their  receivers,  that  they 
frequently  interpose  by  injunction  to  restrain  the  prosecu- 
tion of  actions  against  them,  when  leave  of  court  has  not 
been  first  obtained.3  And  when  a  person  is  proceeding  to 
assert  his  claims  to  property  held  by  a  receiver,  by  an 
action  at  law,  without  obtaining  permission  of  the  court  to 
bring  such  action,  the  court  may,  on  application  of  the  re- 
ceiver, enjoin  him  from  proceeding  with  his  suit,  regardless 
of  however  clear  his  right  may  appear  to  be,  or  of  whether 

1  Meara's  Administrator  v.  Hoi-  3  Evelyn  v.  Lewis,  3  Have,  472 ; 
brook,  20  Ohio  St.,  137.  Tink  v.  Rundle,  10  Beav.,  318;  In 

2  Commonwealth  v.  Runk,  26  Pa.  re  Persse,  8  Ir.  Eq.,  Ill;  Parr  t\ 
St.,  235;  Meara's  Administrator  v.  Bell,  9  Ir.  Eq.,  55. 

Holbrook,  20  Ohio  St.,  137. 
14 


210  EECEIVEKS.  [CHAP.  Till. 

he  was  apprised  of  the  receiver's  appointment  at  the  time 
of  bringing  his  action.1  So  when  a  railroad  company  has 
instituted  proceedings  to  condemn  for  the  use  of  its  road 
certain  real  estate  in  the  custody  of  a  receiver,  without  ob- 
taining leave  of  court,  an  injunction  has  been  allowed  ex 
parte,  to  restrain  the  company  from  proceeding  until  further 
order.2  And  where  tenants,  without  leave  of  court,  have 
brought  actions  of  replevin  or  of  trespass  against  a  receiver, 
who  has  distrained  for  their  rent,  they  may  be  enjoined 
from  proceeding  with  such  actions.3 

§  257.  Notwithstanding  the  extreme  jealousy  thus  shown 
by  the  courts  in  protecting  their  receivers  against  unauthor- 
ized interference  by  suit,  such  protection  will  not  be  ex- 
tended to  acts  which  are  outside  and  in  excess  of  the 
functions  of  the  receiver,  or  to  matters  in  which  he  occu- 
pies the  attitude  of  a  mere  trespasser,  as  in  dealing  with  or 
assuming  possession  and  control  of  property  which  is  not 
embraced  in  his  receivership.  And  when  suit  is  brought 
against  a  receiver  in  another  court  for  acts  committed  by 
him  as  an  individual,  as  for  taking  and  retaining  possession 
of  property  not  pertaining  to  his  receivership,  and  as  to 
which  he  is  a  mere  trespasser,  such  action  will  not  be  en- 
joined by  the  court  appointing  the  receiver.4  And  an  ac- 
tion of  replevin  has  been  maintained  for  the  recovery  of 
such  property,  although  leave  of  court  had  not  been  ob- 
tained to  bring  the  action.  And  it  has  been  held  that  an 
action  against  a  receiver  in  his  official  capacity,  concerning 
matters  pertaining  to  his  receivership,  would  not  be  en- 
joined, on  motion  of  the  receiver,  upon  the  ground  that  the 
matters  in  controversy  have  been  passed  upon  by  the  court 
in  other  proceedings,  since,  if  this  be  true,  it  furnishes  a 
complete  and  sufficient  defense  to  the  action  sought  to  be 
enjoined,  and  the  receiver  should  avail  himself  of  it  in  that 
action.5 

i  Evelyn  V.  Lewis,  3  Hare,  472.  *In  re  Young,  7  Fed.  Eep.,  855. 

ZTinku  Rundle,  lOBeav.,  318.  And  see  Curran  v.  Craig,  22  Fed. 

*In  re  Persse,   8    Ir.   Eq.,   Ill;  Rep.,  101. 

Parr  v.  Bell,  9  Ir.  Eq.,  55.  5  Jay's  Case,  6  Ab.  Pr.,  293. 


CIIAP.  VIII.]  ACTIONS.  211 

§  258.  As  regards  actions  instituted  against  a  debtor  or 
person  over  whom  a  receiver  is  appointed,  there  would  seem 
to  be  no  necessity  for  making  the  receiver  a  party  defend- 
ant to  such  actions,  where  the  rights  and  remedies  of  the 
plaintiff  terminate  with  the  original  debtor,  and  where  the 
receiver  is  not  to  be  adjudged  or  compelled  to  do  anything 
for  plaintiff's  benefit.  And  in  order  to  make  the  receiver  a 
proper  co-defendant  with  the  original  debtor  in  an  action 
against  the  latter,  some  right  to  relief  at  the  receiver's 
hands  should  be  stated,  and  some  relief  prayed  as  against 
him.1  But  it  is  to  be  observed  with  reference  to  actions 
already  begun  against  a  debtor,  over  whose  affairs  a  re- 
ceiver is  subsequently  appointed,  that  the  receiver  can  have 
no  status  in  court  until  he  has  become  a  party  to  the  action, 
the  proper  course,  if  he  desires  to  be  made  a  party,  being  to 
apply  to  the  court  for  that  purpose ;  and  until  this  is  done 
he  can  not  appear  or  take  any  action  in  the  cause.2 

§  259.  The  appointment  of  a  receiver  over  the  effects  of 
one  of  the  defendants,  in  an  action  for  the  foreclosure  of  a 
mortffaffe,  constitutes  no  bar  to  the  continuance  of  the  ac- 
tion,  if  properly  begun ;  and  such  appointment  can  at  most 
only  render  the  action  defective  as  to  parties,  so  as  to  ren- 
der it  necessary  for  the  plaintiff  to  bring  the  receiver  before 
the  court  by  a  supplemental  bill  in  the  nature  of  a  bill  of 
revivor.  And  even  this  course  is  not  necessary  where  the 
parties  in  interest  are  sufficiently  represented  before  the 
court  to  enable  it  to  properly  determine  the  controversy.3 

§  260.  In  an  action  to  foreclose  a  mortgage  given  by  a 
corporation,  when  a  decree  pro  confesso  is  taken  against  the 
corporation,  by  which  plaintiff's  right  to  recover  is  estab- 
lished, and  receivers  of  the  corporation  are  afterward   ap- 

•  Arnold  v.  Suffolk  Bank,  27  see  Honegger  v.  Wettstein,  94  N. 
Barb.,  424.     As  to  the  right  of  a  re-    Y.,  252. 

ceiver  to  be  admitted  to  defend  an        2  Tracy  v.  First  National  Bank  of 
action  brought  against  the  persons    Selma,  37  N.  Y.,  523. 
over  whose  affairs  he  is  appointed,        3  Wilson  v.  Wilson,  1  Barb.  Ch., 

592. 


212  RECEIVERS.  [CHAP.  TUT. 

pointed,  it  is  not  necessary  that  they  should  be  made  parties 
defendant  to  the  proceeding,  although  the  court  may  prop- 
erly admit  them  as  parties  at  any  stage  of  the  cause,  if 
they  seek  to  be  so  admitted.1  And  the  question  whether  a 
receiver  shall  be  permitted  to  defend  an  action  brought 
against  the  person  or  corporation  over  whose  affairs  he  is 
appointed,  rests  wholly  in  the  discretion  of  the  court  ap- 
pointing him,  and  is  not  a  matter  of  right  upon  the  part  of 
the  receiver.  When,  therefore,  a  receiver  of  a  corporation 
is  denied  permission  to  defend  an  action  for  the  foreclosure 
of  mortgages  given  by  the  corporation,  such  action  of  the 
court  will  not  be  reversed  upon  appeal.2  But  when  a  corpo- 
ration is  dissolved,  and  a  receiver  is  appointed  in  an  action 
in  the  state  of  its  domicile,  and  a  court  of  another  state 
proceeds  to  render  judgment  against  the  corporation  in  an 
action  there  pending,  without  making  the  receiver  a  party, 
such  judgment  is  not  binding  against  the  receiver  of  the  cor- 
poration in  the  state  where  it  was  dissolved.3  And  when  the 
action  will,  if  sustained,  result  in  relieving  the  receivers  of 
the  corporation  of  a  considerable  portion  of  their  duties, 
being  equivalent  to  that  extent  to  a  removal  from  their 
office,  it  is  manifestly  proper  and  right  that  they  should  be 
made  parties  defendant,  and  be  allowed  an  opportunity  of 
being  heard  in  their  own  behalf.4 

§  261.  A  motion  to  dismiss  an  action  brought  against  a 
receiver,  upon  the  ground  that  leave  of  the  court  was  not 
first  had  before  beginning  the  action,  is  waived  by  the 
appearance  of  counsel  for  the  receiver,  such  appearance 
being  an  admission  that  the  defendant  has  been  regularly 
brought  into  court.  Want  of  permission,  therefore,  to  bring 
the  action  can  not  be  urged  as  a  ground  for  dismissal  after 
such  appearance  on  the  part  of  the  receiver.5 

iWiUink    v.   Morris    Canal    and  4  Smith    v.     Trenton    Delaware 

Banking  Co.,  C  Green  Ch.,  377.  Falls  Co.,  3  Green  Ch.,  505. 

2  Patrick  v.  Eells,  30  Kan.,  680.  SHubbeU  v.  Dana,  9  How.    Pr., 

SMcCulloch  v.  Norwood,  58  N.  424.    See,  also,   In   re   Young,  7 

Y.,  562,  reversing  S.  C,  36  N.  Y.  Fed.  Rep.,  855. 
Supr.  Ct.  R.,  180. 


CHAP.  VIII.]  ACTIONS.  213 

§  262.  Courts  of  equity  will  not  ordinarily  entertain  a 
bill  for  an  injunction  against  their  receivers,  the  proper 
remedy  for  the  party  aggrieved  being  to  apply  to  the  court 
for  leave  to  assert  his  rights  and  to  enforce  his  remedies  in 
the  action  m  which  the  receiver  was  appointed.1  And  since 
a  receiver,  authorized  by  the  court  to  bring  an  action,  is 
bound  to  proceed  therewith,  the  court  will  not  permit  him 
to  be  enjoined  from  so  proceeding.  The  proper  course,  in 
such  case,  for  parties  dissatisfied  with  the  receiver's  conduct, 
is  to  apply  to  the  court  appointing  him  for  relief,  instead  of 
seeking  to  enjoin  him  by  another  suit.2 

§  263.  Where  there  are  different  and  rival  claimants  to 
a  fund  in  the  hands  of  a  receiver,  each  of  whom  has  insti- 
tuted proceedings  againsfc  him  for  the  fund,  it  is  proper  for 
the  receiver  to  bring  an  action  in  the  nature  of  a  bill  of  in- 
terpleader against  such  claimants,  and  to  compel  them  to 
interplead  and  to  determine  their  conflicting  rights  to  the 
fund.3 

§  264.  It  is  held,  in  actions  against  receivers  in  their 
official  capacity,  that  they  can  not,  either  expressly  or  im- 
pliedly, waive  any  legal  or  equitable  defense  on  which  their 
principal  might  have  relied  had  the  action  been  brought 
against  him.  Receivers  of  an  insurance  company  can  not, 
therefore,  in  an  action  brought  against  them  to  recover  upon 
a  policy  of  insurance  issued  by  the  company,  waive  or  dis- 
pense with  the  conditions  of  the  policy  as  to  notice  of  loss.4 
And  although  leave  may  be  granted  to  sue  a  receiver,  he  is 
at  liberty  to  assert  any  defense  which  he  may  have  to  the 
action,  either  by  plea,  answer  or  demurrer.5  And  he  has 
the  same  right  of  appeal  from  an  adverse  judgment  for  the 
recovery  of  funds  pertaining  to  his  receivership,  as  the  party 
over  whom  he  was  appointed  would  have  had.6 


1  Smith  v.  Earl  of  Effingham,  2 

4McEvers  v.  Lawrence,  Hoffm., 

Beav.,  232. 

172. 

2Winfield   v.   Bacon,    24   Barb., 

5 Davis  v.  Duncan,  19  Fed.  Rep., 

154. 

477. 

3  Winn  eld  v.   Bacon,   24   Barb., 

<>Melendy    v.   Barbour,   78  Va., 

154. 

544. 

214  EECEIVEKS.  [CHAP.  VIII. 

§  265.  "Where  persons  apply  for  and  obtain  leave  of  court 
to  bring  an  action  against  a  receiver  in  his  official  capacity, 
it  is  not  essential  to  the  jurisdiction  of  the  court  over  the 
receiver,  or  to  the  validity  of  the  order,  that  the  application 
should  be  based  upon  notice  to  the  parties  in  the  action 
wherein  the  receiver  was  appointed.  It  is  sufficient  that 
leave  be  granted  by  the  court  having  control  over  the  re- 
ceiver, upon  notice  to  him,  against  whom  alone  the  cause  of 
action  exists  and  against  whom  the  proceedings  must  be 
brought.1 

§  2G6.  The  practice  of  the  English  Court  of  Chancery, 
with  reference  to  defending  actions  of  ejectment  brought 
against  receivers,  seems  to  have  been  to  apply  to  the  court 
for  leave  to  defend.  And  an  order  of  reference  to  a  master 
Avas  sometimes  made,  to  ascertain  and  report  whether  it  was 
for  the  best  interests  of  the  parties  that  the  receiver  should 
defend  the  ejectment.2 

§  267.  With  regard  to  the  liability  for  costs  incurred  by 
a  receiver  in  defense  of  an  action,  it  has  been  held  that  he 
was  not  entitled  to  the  costs  of  defending,  when  he  had  not 
first  obtained  leave  of  the  court  appointing  him  to  defend.3 

§  268.  The  discharge  of  a  receiver  by  order  of  court  is 
no  bar  to  an  action  against  him  by  third  persons  claiming 
property  of  which  he  has  taken  possession ;  and  when  it  is 
alleged  that  the  receiver  has  sold  such  property  after  notice 
of  the  owner's  claim  thereto,  the  court  will  permit  the  owner 
to  bring  an  action  against  the  receiver,  notwithstanding  he 
has  been  discharged;  especially  when  the  claimants  had  no 
notice  of  the  receiver's  application  for  a  discharge.4  And 
the  rescinding  of  an  order  appointing  a  receiver,  without 
prejudice  to  any  party  or  claimant,  constitutes  no  defense 
to  an  action  against  him  to  recover  property  of  which  he 
had  taken  possession  under  his  appointment.5 

i  Potter  v.  Bunnell,  20  Ohio  St.,  4  Miller  v.  Loeb,  64  Barb.,  454. 

15O.  5  Peacock  v.  Pittsburg   Locomo- 

2  Anonymous,  6  Ves.,  287.  tive  and  Car  Works,  52  Ga.,  417. 
aConyers  v.  Crosbie,  6  Ir.  Eq.,  657. 


CHAPTER  IX. 

OF  THE  RECEIVER'S  LIABILITIES. 

§  269.     Receiver  responsible  directly  to  court;  liabilities  to  third  per- 
sons, how  and  when  enforced ;  not  accountable  to  other  court. 

270.  Receiver  liable  for  injury  to  property  while  in  Ins  possession ; 

plaintiff  not  liable. 

271.  Leave  of  court  necessary  before  bringing  suit  against  receiver. 

272.  Not  personally  liable  on  covenant  made  in  official  capacity. 

273.  Not  liable  on  covenants  of  original  party ;  when  liable  for  rent. 

274.  Liability  for  loss  of  funds  on  failure  of  bank ;  liable  for  mingling 

funds. 
274  a.  When  receiver  of  bank  liable  to  pay  deposit  or  draft  in  full ; 
check ;  del  credere  commission. 

275.  Liability  dependent  upon  receiver's  negligence ;  bills  of  exchange 

of  f ailing  tradesman ;  misconduct  of  attorney. 

276.  When  liable  for  employing  property  in  his  private  business ; 

speculative  profits. 

277.  Liable  as  trespasser  for  selling  mortgaged  property. 

278.  Liability  does  not  terminate  until  discharged ;  appointed  trustee 

in  insolvent  proceedings,  still  liable  as  receiver. 

279.  Receivers  of  railway  liable  in  another  state  for  breach  of  duty 

as  common  carriers. 

280.  Liable  to  commitment  for  failure  to  pay  balance  into  court;  the 

practice  in  such  cases. 

281.  When  not  liable  to  landlord  for  rent  of  partnership  premises. 

282.  Liable  for  paying  money  to  persons  not  entitled. 

283.  Not  liable  for  loss  to  real  property  remaining  in  owner's  posses- 

sion. 

284.  Solicitor  assuming  to  act  as  receiver,  liable  for  loss  in  rents. 

285.  Receiver's  liability  extended  to  his  administrator. 

286.  Dismissal  of  bill  does  not  discharge  liability ;  receiver  protected 

by  order. 

§  269.  A  receiver  is  responsible  for  his  official  acts 
directly  to  the  court  appointing  him,  and  this  responsibility 
continues  until  he  is  finally  discharged.1     This  immediate 

i  Henry  v.  Kaufman,  24  Md.,  1.     See  Conkling  v.  Butler,  4  Biss.,  22. 


f>16  RECEIVERS.  [CHAP.  IX. 

and  direct  responsibility  to  the  court,  however,  does  not  re- 
lieve him  from  liabilities  which  he  may  incur  toward  third 
parties,  and  these  liabilities  are  generally  recognized  and 
frequently  enforced  by  the  same  court  which  has  appointed 
him.  And  when  a  party  to  the  cause,  who  is  interested  in 
the  funds  in  the  receiver's  hands,  ascertains  that  the  receiver 
has  made  improper  payments  or  has  misapplied  the  funds, 
or  any  portion  of  them,  he  may  apply  to  the  court  for  relief 
at  any  stage  of  the  cause,  and  it  is  not  necessary  that  he 
should  wait  until  the  receiver  passes  his  accounts,  and  then 
have  the  improper  payments  disallowed.1  As  a  general  rule, 
however,  a  receiver  can  only  be  called  to  account  by  the ' 
court  appointing  him,  and  another  court  will  not  entertain 
a  bill  to  compel  him  to  account  for  the  performance  of  his 
trust,  since  he  is  not  the  receiver  of  the  second  court,  and 
can  not  be  called  upon  to  answer  as  such.2  And  he  can  only 
be  divested  of  the  fund  entrusted  to  him  as  receiver  by  an 
order  of  the  court  appointing  him,  made  in  the  action  in 
wThich  he  was  appointed.3 

§  270.  Where  property  in  litigation  passes  by  order  of 
court  into  the  hands  of  a  receiver,  who  gives  a  bond  for  the 
faithful  execution  and  performance  of  his  trust,  the  remedy 
for  injury  done  or  alleged  to  be  clone  during  the  receiver's 
possession  should  be  sought  against  him  and  his  sureties, 
and  not  against  the  plaintiff  in  the  action  in  which  he  was 
appointed.  The  receiver  being  appointed  for  the  benefit, 
not  of  the  plaintiff  alone,  but  of  all  parties  in  interest,  and 
being  an  officer  of  the  court,  he  is  liable  for  any  fraud  or 
negligence  of  his  own  whereby  injury  accrues  to  the  prop- 
erty entrusted  to  him.  In  the  absence,  therefore,  of  any 
evidence  of  fraud  or  collusion  on  the  part  of  the  plaintiff  in 
the  action,  he  will  not  be  held  liable  for  injury  to  the  prop- 
erty while  in  the  receiver's  possession.4 

i  DeWinton  v.  Mayor  of  Brecon,  4  Kaiser  v.  Kellar,  21  Iowa,   95. 

28  Beav.,  200.  See,  also,   Terrell  v.  Ingersoll,   10 

~  2Conkling  v.  Butler,  4  Biss.,  22.  Lea,  77;  Downs  v.  Allen,  10  Lea, 

SGalster    v.    Syracuse    Savings  652. 
Bank,  29  Hun,  594. 


CHAI\  IX.]  LIABILITIES.  - 1  7 

§  271.  It  is  important  to  observe,  that  while  the  receiver's 
liability  to  the  parties  in  interest,  for  misconduct  or  injury 
to  the  property  entrusted  to  his  care,  is  generally  recognized 
by  courts  of  equity,  they  will  not  ordinarily  permit  such 
liability  to  be  enforced  against  him  by  legal  proceedings, 
unless  leave  of  court  is  first  obtained  for  that  purpose. 
Being  the  representative  of  the  court,  it  will  not  permit  him 
to  be  made  a  defendant  without  its  consent  having  first  been 
given.  And  persons  desirous  of  enforcing  demands  against 
a  receiver  are,  therefore,  required  either  to  apply  to  the 
court,  by  motion  or  petition,  for  relief  against  the  receiver, 
or  to  ask  leave  of  the  court  to  institute  an  action  against 
him.1 

§  272.  A  receiver  will  not  be  held  personally  liable,  in 
his  individual  capacity,  upon  a  covenant  or  instrument  made 
by  him  in  his  official  capacity,  and  the  only  remedy  upon 
such  covenant  must  be  sought  against  the  estate  of  which 
he  was  receiver.  Thus,  when  the  receiver  of  a  banking 
corporation  sells  and  assigns  certain  judgments  in  favor  of 
the  bank,  and  the  instrument  of  assignment  is  executed 
strictly  in  his  official,  and  not  in  his  personal  capacity,  and 
contains  a  covenant  that  the  several  judgments  sold  are  due 
and  unpaid,  no  personal  liability  is  incurred  by  the  receiver 
upon  such  covenant,  and  it  will  be  presumed,  under  such 
circumstances,  that  the  purchaser  trusted  to  the  receiver  in 
his  official  capacity.2 

§  273.  As  a  rule,  receivers  are  not  liable  upon  the  cove- 
nants of  the  persons  over  whose  effects  they  are  appointed, 
but  become  liable  solely  by  reason  of  their  own  acts.  And 
receivers  who  have  been  appointed  over  a  corporation,  and 
who  have  accepted  the  trust  and  taken  possession  of  the 
assets,  do  not  thereby  become  liable  for  rent  of  the  premises 
held  by  the  company  under  a  lease;  nor  can  they  be  held 
liable  until  they  elect  to  take  possession  of  the  premises,  or 

!See  chapter  VIII,  subdivision  405.  See,  also,  Ellis  v.  Little,  27 
V,  Actions  against  Receivers.  Kan.,  707. 

2  Livingston  v.  Pettigrew,  7  Lans., 


218  RECEIVERS.  [CHAP.  IX. 

until  the  doing  of  some  act  which  would  in  law  be  equiva- 
lent to  such  an  election.1  But  when  a  receiver  enters  upon 
and  occupies  premises  which  had  been  leased  to  a  corpora- 
tion over  which  he  is  appointed,  he  thereby  becomes  liable 
for  the  rent  due  under  the  lease,  the  liability  in  such  case 
being  the  common-law  liability  of  an  assignee  of  a  lease, 
and  not  for  the  debt  due  from  the  corporation.  And  in  such 
case,  the  facts  being  undisputed,  it  is  proper  for  the  court 
to  direct  the  receiver  to  make  payment  to  the  lessor,  with- 
out a  reference  to  determine  the  matter.2 

§  274.  The  question  of  a  receiver's  liability  for  loss  of 
the  funds  entrusted  to  him,  by  reason  of  the  misconduct  of 
another,  is  one  of  importance,  and  has  sometimes  arisen  in 
cases  of  the  failure  of  banks  having  funds  of  receivers  in 
their  custody.  The  question  would  seem  to  depend  upon 
the  manner  of  keeping  the  account,  and  it  has  been  held 
that  if  a  receiver  remits  to  his  bank  money  which  comes  to 
his  hands  in  his  official  capacity,  to  be  deposited  with  his 
private  account,  and  not  to  a  separate  account  as  receiver, 
thereby  mingling  the  trust  funds  with  his  individual  funds, 
he  will  be  liable  for  the  loss  on  failure  of  the  bank.3  So 
when  a  receiver  deposits  the  funds  of  his  receivership  with 
his  bankers,  and  receives  from  them  for  his  own  benefit 
interest  upon  the  balances  remaining  on  deposit,  he  will  be 
held  liable  for  any  loss  which  may  result  from  their  bank- 
ruptcy, and  will  be  compelled  to  make  good  such  loss.4  And 
a  receiver  will  be  held  accountable  for  the  loss  of  all  funds 
of  the  receivership  occasioned  by  the  failure  of  a  banker 
with  whom  they  are  deposited,  if  deposited  in  such  manner 
as  to  be  beyond  his  absolute  control.  For  example,  when  a 
receiver,  in  order  to  induce  certain  persons  to  become  his 
sureties,  enters  into  an  arrangement  with  them  whereby  the 

1  Commonwealth  v.  Franklin  In-        2  People  v.  Universal  Life  Insur- 
surance  Co.,  115  Mass.,  278.     And    ance  Co.,  30  Hun,  142. 
see  this  case  as  to  what  constitutes        3Wren  v.  Kirton,  11  Ves.,  377. 
such  an  election.  4  Drever  v.  Maudesley,  13  L.  J.,  N. 

S.  Ch.,  433;  S.  C,  8  Jur.,  547. 


CHAP.  IX.]  LIABILITIES.  219 

funds  of  his  receivership  are  to  be  deposited  in  bank  in  the 
joint  names  of  the  sureties,  to  be  drawn  therefrom  upon 
drafts  drawn  by  a  partner  of  one  of  the  sureties  and  signed 
by  the  receiver,  and  the  bankers  fail,  thereby  causing  a  loss 
to  the  fund,  the  receiver  and  his  sureties  are  liable  for  such 
loss,  since  the  receiver  has  parted  with  his  exclusive  control 
over  the  fund  by  associating  with  himself  the  authority  of 
another  person.1 

§  274  a.  The  question  of  the  liability  of  a  receiver  of  a 
bank  to  payment  in  full  of  moneys  which  had  been  specially 
deposited  in  or  remitted  to  the  bank,  would  seem  to  be  con- 
trolled by  the  fact  as  to  whether  such  funds  were  kept  sep- 
arate and  distinct  from  the  general  funds  of  the  bank,  so  as 
to  be  capable  of  identification,  or  whether  they  were  mingled 
with  the  general  funds,  with  no  means  of  discriminating 
between  them.  Thus,  money  collected  by  an  insolvent 
bank  upon  a  draft  sent  to  it  for  collection  and  mingled  with 
its  general  funds,  with  no  marks  of  distinction,  can  not  be 
recovered  in  full  against  a  receiver  of  the  bank,  such  money 
being  incapable  of  identification  or  of  being  distinguished 
from  the  funds  belonging  to  the  general  creditors.2  So 
when  a  savings  bank  is  made,  by  an  order  of  court,  the 
depositary  of  the  funds  belonging  to  suitors  in  such  court 
and  held  by  its  officers,  such  funds  being  received  by  the 
bank  from  time  to  time  like  all  other  deposits,  and  mingled 
with  its  other  funds,  with  no  means  of  identification,  a 
receiver  of  the  bank  will  not  be  required  to  pay  such  deposit 
in  full,  and  it  will  only  be  entitled  to  share  fro  rata  with 
other  depositors  and  creditors.  Nor,  in  such  case,  does  the 
fact  that  the  bank  did  not  pay  interest  on  such  deposit,  as 
on  others,  change  the  principle.  And  this  is  true,  even 
though  the  court  making  the  deposit  is  the  same  which 
appoints  the  receiver,  it  having  no  other  or  greater  rights 

iSalwayt'.  Sal  way,  2  Russ.  &M.,    Lords,  sub  nom.  White  v.  Baugh, 
215,  reversing  S.  C,  4  Russ.,  60,  and    9  Bli.,  N.  S.,  181. 
affirmed  on  appeal  to  the  House  of        -  Illinois  Trust  &  Savings  Bank  v. 

Smith,  21  Blatehf.,  275. 


220 


EECEIVERS. 


[CHAP.  IX. 


under  suck  circumstances  than  those  of  any  other  creditor.1 
And  since  a  check  drawn  in  the  ordinary  form,  and  not 
describing  any  particular  fund  out  of  which  it  is  payable, 
does  not  operate  as  an  assignment  of  funds  in  the  hands  of 
the  drawee,  if  a  receiver  is  afterwards  appointed  over  the 
drawer  of  the  check,  who  takes  possession  of  the  entire  fund 
on  deposit  before  the  check  is  presented,  the  drawee  is  not 
entitled  to  payment  in  full  at  the  hands  of  the  receiver, 
having  no  specific  lien  upon  the  fund.2  And  to  entitle  the 
payee  of  a  draft  drawn  upon  a  bank,  but  not  paid  before 
the  appointment  of  a  receiver  over  the  bank,  to  payment  in 
full  as  against  the  receiver,  the  specific  fund  must  be  traced 
into  the  hands  of  the  receiver  against  which  the  draft  was 
drawn,  or  which,  before  the  receivership,  had  been  set  apart 
to  its  payment  in  such  manner  as  to  constitute  it  a  trust 
fund,  the  equitable  title  to  which  had  vested  in  the  payee  of 
the  draft.  And  when  this  does  not  appear,  the  payee  can 
not,  as  against  the  receiver,  claim  priority  over  other  cred- 
itors.3 But  since  the  proceeds  of  goods  consigned  to  a  factor 
to  be  sold  on  a  del  credere  commission  continue  to  be  the 
property  of  the  consignor  so  long  as  they  may  be  traced 
and  identified,  they  may  likewise  be  claimed  as  against  a 
receiver  of  the  factor,  who  only  succeeds  to  the  factor's 
rights  in  this  respect.  And  the  proceeds  of  goods  thus  con- 
signed having  been  kept  distinct,  the  receiver  may  be 
required  to  apply  them  in  payment  of  drafts  drawn  by  the 
consignor  upon  the  factor,  which  have  passed  into  the  hands 
of  third  parties.4 

§  275.  The  extent  of  a  receivers  liability  for  the  miscar- 
riage or  fault  of  another  is  dependent  in  a  large  degree 
upon  whether  the  loss  occurred  through  the  receiver's  own 
neo-lie-ence  or  default,  and  in  the  preceding  section  it  has 


lOtisr.  Gross,  96  HI.,  612. 

2  Attorney-General  v.  Continental 
Life  Insurance  Co.,  71  N.  Y.,  325. 
See,  also,  Butler  v.  Sprague,  66  N. 
Y.,  392. 


3  People  v.  Merchants  &  Mechan- 
ics Bant,  78  N.  Y.,  269. 

4  Francklyn  v.  Sprague,  10  Hun, 
589. 


CHAP.  IX.]  LIABILITIES.  221 

been  shown  that,  in  cases  of  loss  occurring  by  reason  of  his 
own  negligence  or  misfeasance,  the  receiver  will  be  held 
liable.  Where,  however,  he  has  acted  with  evident  caution 
and  for  what  he  deemed  the  best  interests  of  the  estate,  and 
a  loss  occurs  without  fault  of  his  own,  he  will  not  ordina- 
rily be  required  to  make  good  such  loss.1  And  where  a 
receiver  collected  a  large  sum  of  money  due  the  estate, 
and,  deeming  it  unsafe  to  remit  the  amount  in  specie,  he 
purchased  bills  of  exchange  of  a  tradesman  then  in  good 
credit,  but  who  soon  afterward  failed,  the  receiver  having 
had  no  knowledge  of  his  failing  circumstances,  it  was  held 
that  he  was  not  personally  liable  for  the  loss.2  So  when  a 
loss  occurs  through  the  fraud  or  misconduct  of  an  attorney, 
as  by  his  misappropriation  of  funds  collected  for  the  re- 
ceiver, if  the  receiver  used  due  and  reasonable  care  in  select- 
ing such  attorney,  he  will  not  be  charged  with  the  loss.3 

§  27G.  "Where  property  is  placed  in  a  receiver's  hands 
for  an  indefinite  period,  with  a  probability  of  remaining 
there  for  a  number  of  years  pending  the  litigation,  and  it 
is  of  such  a  nature  that  it  may  be  profitably  employed  by 
hiring,  it  would  seem  to  be  the  receiver's  duty  so  to  do. 
And  if,  instead  of  so  hiring  it,  he  employs  the  property  in 
and  about  his  own  private  business,  he  thereby  receives  a 
benefit  from  the  trust  committed  to  him  for  which  he  will 
be  held  accountable,  and  which  should  be  charged  to  him 
in  his  accounts.4  But  when  a  receiver  sells  property  be- 
longing to  his  receivership  he  is  only  liable  for  the  proceeds 
upon  the  basis  of  actual  sales  and  receipts ;  and  in  the  ab- 
sence of  negligence,  misconduct  or  bad  faith  on  his  part,  he 
is  not  liable  for  probable  or  speculative  profits  which  might 
have  been  realized  had  he  continued  the  management  of  the 
property.5 

1  Knight  v.  Plimouth,  3  Atk.,  480 ;  3  Powers  v.  Loughridge,  38  N.  J. 

Union  Bank  Case,  37  N.  J.  Eq.,  Eq.,  396;  Union  Bank  Case,  37  N. 

420,  affirmed  on  appeal  sub  nam.  J.  Eq.,  420,  affirmed  on  appeal  sub 

Handford  v.  Clarke,  38  N.  J.  Eq.,  nom.  Sandford  v.  Clarke,  38  N.  J. 

265;  Powers  v.  Loughridge,  38  X.  Eq.,  263. 

J.  Eq.,  396.  4  Battaile  v.  Fisher,  36  Miss.,  321. 

2 Knight  v.  Plimouth,  3  Atk.,  480.  5  Domain  v.  Cassidy,  55  Miss.,  820. 


222  RECEIVERS.  [CHAP.  IX. 


m  t. 


"When  a  receiver,  without  permission  of  court, 
and  pending  an  injunction  restraining  him  from  so  doing, 
forcibly  takes  possession  of  property  which  had  been  mort- 
gaged by  the  defendant  debtor  before  the  receiver's  ap- 
pointment, and  sells  the  same,  he  becomes  liable  therefor 
as  a  trespasser,  and  will  be  deemed  as  much  a  trespasser  as 
the  mortgagor  himself  would  have  been  had  he  undertaken 
to  seize  and  sell  the  property  after  giving  the  mortgage.1 

§  278.  The  liability  of  a  receiver  to  the  court  appointing 
him  does  not  terminate  until  his  discharge.  And  when  a 
defendant,  whose  property  the  receiver  has  taken  into  pos- 
session and  sold  by  order  of  the  court,  afterward  takes  ad- 
vantage of  the  insolvent  laws  of  the  state,  and  the  receiver 
is  appointed  as  his  trustee  in  the  insolvent  proceedings,  such 
appointment  does  not  relieve  him  from  his  responsibility  to 
the  court  of  equity  as  receiver.  The  power  of  that  court 
in  such  a  case  is  regarded  as  ancillary  to  the  jurisdiction  of 
the  insolvent  court,  and  the  receiver  may  be  required  by 
the  court  of  equity  to  bring  the  fund  into  that  court.2 

§  279.  The  general  doctrine  already  considered,  that  re- 
ceivers are  liable  only  to  the  court  appointing  them,  has 
been  somewhat  modified  in  Massachusetts,  in  the  case  of 
receivers  over  railways.  And  it  is  there  held  that,  when  re- 
ceivers are  operating  a  railway  under  appointment  from  a 
court  of  chancery  of  another  state,  and  the  courts  of  that 
state  hold  them  liable  as  common  carriers  and  they  are 
acting  in  that  capacity,  they  are  liable  to  an  action  in  the 
courts  of  Massachusetts,  for  a  breach  of  duty  as  common 
carriers.3  This  doctrine,  however,  is  plainly  inconsistent 
with  the  weight  of  authority,  in  so  far  as  it  recognizes  a 
right  of  action  against  receivers,  without  permission  of  the 
court  appointing  them.4 

i  Manning  v.  Monaghan,  1  Bosw.,  And  see  S.  C,  10  Bosw.,  231,  when 

459.     See  S.  C,  23  N.  Y.,  539,  where  tried  again  in  the  court  below, 
the  right  of  action  against  the  re-        2  Henry  v.  Kaufman,  24  Md.,  1. 
ceiver  as  a  trespasser  in  such  case        3  Paige  v.  Smith,  99  Mass.,  395. 
was  sustained,  but  the  case  was       4  See  chapter  VIII,  subdivision  V, 

reversed  for  misjoinder  of  parties.  Actions  against  Eeceivers. 


CHAP.  IX.]  LIABILITIES.  223 

§  280.  When  a  receiver  fails  to  comply  with  an  order  re- 
quiring him  to  pay  into  court  a  balance  reported  to  be  in 
his  hands,  he  is  liable  to  be  committed  for  disobeying  the 
order.  But  the  proper  practice  is  not  to  grant  an  order  for 
the  commitment  in  the  first  instance,  but  to  make  the  order 
in  the  alternative,  requiring  him  to  pay  the  money  within  a 
given  time  or  to  stand  committed.1  When  he  is  in  default 
in  the  payment  into  court  of  interest  upon  a  balance  due 
from  him,  and  has  disobeyed  orders  of  the  court  for  its  pay- 
ment, he  may  be  punished  by  committal.2  And  since  the 
receiver  is  an  officer  of  the  court,  he  need  not  be  served  with 
a  writ  of  execution  of  a  decretal  order  of  the  court,  but  only 
with  a  copy  of  the  order,  and  if  he  disobeys  this  he  is  liable 
to  be  committed.3  So  the  refusal  of  a  receiver  to  pay  over 
moneys  in  accordance  with  the  order  of  the  court  consti- 
tutes a  contempt  and  may  be  punished  as  such.  And  upon 
appeal  by  the  receiver  from  an  order  adjudging  him  guilty 
of  contempt  for  such  refusal,  the  court  will  not  review  the 
propriety  of  the  order  directing  such  payment,  since  if  the 
court  below  had  power  to  make  the  order,  and  if  it  is  not 
appealed  from,  its  propriety  can  not  be  questioned  upon  an 
appeal  from  the  order  adjudging  the  receiver  guilty  of  con- 
tempt.4 Nor,  in  proceedings  against  a  receiver  for  contempt 
in  refusing  to  turn  over  money  in  accordance  with  the  di- 
rection of  the  court,  can  he  justify  such  refusal  upon  the 
ground  that  he  has  been  garnished  as  to  the  money  in  ques- 
tion.5 And  the  appropriation  by  a  receiver  to  his  own  use 
of  the  funds  in  his  possession,  without  leave  of  court,  con- 
stitutes a  gross  breach  of  his  trust,  and  a  contempt  of  court 
which  may  be  punished  either  b}7  fine  or  imprisonment,  or  by 
both,  at  the  discretion  of  the  court.  And  in  such  case,  the 
object  of  an  attachment  and  commitment  for  the  contempt 

1  Davies  v.  Cracraft,  14Ves.,  143.  344.    And  see  this  case  as  to  the 

2  In  re  Bell's  Estate,  L.  R.,  9  Eq.,  practice  upon  proceedings  against 
172.  a  receiver  for  contempt  under  the 

3  Anonymous,  Mos.,  40.  statutes  of  New  York. 

*  Clark   v.    Bininger,   75  N.  Y.,        5  People  v.  Brooks,  40  Mich.,  333. 


i>0_L  RECEIVERS.  [ciIAP.  IX. 

being  not  merely  to  compel  the  restoration  of  the  money 
illegally  taken  b}T  the  receiver,  but  to  punish  the  offense  as 
well,  the  discretion  of  the  court  will  not  be  controlled  by  the 
fact  that  the  receiver  has  no  present  means  of  repaying  what 
he  has  abstracted.1  So  when  the  appointment  of  a  receiver 
is  revoked  and  he  is  ordered  to  restore  to  the  proper  parties 
the  property  and  money  received  by  him,  he  may  be  pun- 
ished for  contempt  if  he  refuses  to  obey  such  order.2 

§281.  Where  a  receiver  is  appointed  of  the  effects  of  a 
partnership,  but  the  only  assets  which  come  to  his  hands  are 
notes  and  book  accounts  of  the  firm,  it  has  been  held  that 
he  is  not  liable  to  the  landlord  of  the  premises  where  the 
business  was  conducted  for  the  rent  thereof,  since  he  was 
not  possessed  of  any  property  on  which  the  landlord  had  a 
right  to  distrain.3 

§  282.  It  has  been  said  that  if  a  receiver  pays  money  to 
persons  who  prove  not  to  be  entitled  thereto,  although  he 
may  have  acted  innocently  and  supposed  them  to  be  en- 
titled in  right  of  the  parties  to  the  cause,  he  should  be  held 
liable  to  the  parties  in  interest,  on  the  ground  that  in  mak- 
ing such  payments  he  departs  from  the  strict  line  of  his 
duty,  and  is  therefore  liable  for  any  error  that  he  may  com- 
mit in  so  doing.4 

§  283.  Under  the  practice  of  the  English  Court  of  Chan- 
cery, in  the  case  of  a  receiver  over  real  property,  it  was 
proper  for  the  parties  to  the  cause  to  make  application  to 
the  court  that  the  owner  be  required  to  deliver  possession  to 
the  receiver.  And  if  a  loss  occurred  because  of  the  owner 
beino-  allowed  to  remain  in  possession,  it  was  held  to  be  the 
fault  of  the  parties  in  interest  in  the  cause  in  not  applying 
for  such  an  order,  rather  than  the  fault  of  the  receiver.5 

§  284.  When  a  solicitor  in  a  cause  has  improperly  as- 
sumed the  character  of  a  receiver,  and  has  acted  in  that 

i  Cartwright's    Case,    111  Mass.,  3  In  re  Brown,  3  Edw.  Ch.,  384. 

230.     And  see  this  case  for  the  pro-  *  McCan  v.  O'Ferrall,  West  H.  L., 

cedure  in  such  cases.  593. 

2  People  v.  Jones,  33  Mich.,  303.  &  Griffith  v.  Griffith,  2  Vea.,  400. 


CHAP.  IX.]  LIABILITIES.  225 

capacity  without  having  been  appointed,  thereby  leading  the 
parties  in  interest  to  believe  that  he  had  been  duly  appointed 
as  receiver,  he  will  bo  held  liable  for  any  loss  in  the  collec- 
tion of  the  rents  which  may  occur  through  his  negligence.1 

§  235.  It  would  seem  that  the  liability  of  a  receiver  may 
sometimes  be  extended  to  his  administrator.  For  example, 
when  the  administrator  of  a  deceased  receiver  submits  to  an 
accounting  as  to  rents  which  came  to  the  receiver's  hands 
during  his  life-time,  the  court  may  order  him  to  pay  over 
the  amount  which  appears  to  be  due.2 

§  28G.  It  is  to  be  observed,  as  regards  the  receiver's  ac- 
countability to  the  court  from  which  he  derives  his  appoint- 
ment, that  the  dismissal  of  the  bill  upon  which  he  was 
appointed  does  not  have  the  effect  of  releasing  him  in  any 
manner;  and  being  an  officer  of  the  court,  he  is  subject  to 
its  orders  in  relation  to  the  fund  or  effects  placed  in  his 
hands,  until  he  is  finally  discharged  by  the  court.3  But  when 
the  funds  of  the  receivership  have  been  regularly  distributed 
under  the  orders  of  the  court  among  the  creditors  of  the 
estate  whose  claims  have  been  duly  proven,  the  receiver  is 
not  liable  in  an  action  for  further  demands  or  claims  made 
by  other  creditors.4  And  an  order  appointing  a  receiver  in 
a  cause  in  which  the  court  has  full  jurisdiction,  affords 
protection  to  the  receiver  for  all  acts  done  under  and  in 
conformity  with  such  order,  even  though  it  is  afterward 
reversed  for  error.  An  action  can  not,  therefore,  be  main- 
tained against  a  receiver  to  recover  rents  collected  and  paid 
over  by  him  as  receiver  out  of  real  estate  of  a  judgment 
debtor,  the  court  having  full  jurisdiction  of  the  matter,  even 
though  the  appointment  is  subsequently  reversed  upon  the 
ground  that  the  property  in  question  was  exempt  from  exe- 
cution, and  therefore  not  subject  to  the  appointment  of  a 
receiver.' 

»  Wood  v.  Wood,  4  Russ.,  558.  <  Keene  v.  Gaehle,  56  Md.,  343. 

2  Mugan  v.  Fallon,  5  Ir.  Eq.,  490.  'Holcombe  v.  Johnson,  27  Minn., 

:' State  v.  Gibson,  21  Ark.,  140.  353. 
15 


CHAPTER  X. 

OF  RECEIVERS  OVER  CORPORATIONS. 

I.  Principles  Governing  the  Jurisdiction, §  287 

II.  Functions,  Duties  and  Rights  of  Action  of  the  Receiver,      313 

ni.  Receivers  of  Insolvent  Corporations, 343 

rv.  Receivers  of  National  Banks, 358 


I.  Principles  Governing  the  Jurisdiction. 

287.  Jurisdiction  of  equity  over  corporations  enlarged  by  statute. 

288.  Power  to  wind  up  corporation  conferred  by  statute ;  receiver  not 

usually  granted  under  general  equity  powers. 

289.  Statutes  enlarging  the  jurisdiction  strictly  construed;  method 

prescribed  must  be  strictly  followed. 

290.  Corporation  a  necessary  party  to  the  proceeding ;  omission  of, 

may  be  taken  advantage  of  by  writ  of  error. 

291.  Receiver  need  not  be  made  a  party  to  subsequent  proceeding  for 

another  receiver;  bill  not  demurrable  because  it  prays  re- 
ceiver. 

292.  General  allegations  of  fraud  insufficient ;  receiver  not  appointed 

when  no  fraud  or  danger  shown ;  insolvency  and  fraud. 

293.  Breach  of  trust  by  corporate  officers ;  no  place  of  business  and 

no  corporate  officers ;  trust  deed  securing  unauthorized  notes 
of  bank. 

294.  Receiver  of  unauthorized  issue  of  stock,  when  refused ;  share- 

holder who  has  parted  with  his  interest  not  entitled  to  relief. 

295.  Long  acquiescence  of  shareholder  a  bar  to  relief ;  receiver  of 

rents  and  tolls  refused ;  effect  of  shareholder's  participation  in 
fraud. 

296.  Legislation  and  decisions  of  other  states,  when  considered  in  re- 

fusing receiver  over  new  issue  of  stock. 

297.  Sequestration  for  benefit  of  creditors ;  rights  of  attaching  cred- 

itors subordinate ;  transfer  to  new  corporation. 

298.  Right  of  judgment  creditors  to  receiver  over  corporation,  con- 

ferred by  statute. 

299.  Officers  and  shareholders  required  to  account  to  receiver  to  pay 

judgment  creditors. 


CHAP.  X.]  CORPORATIONS.  227 

§  300.     Judgment  creditor  allowed  receiver  over  rents  and  tolls  of  bridge 
company. 

301.  Creditor  not  entitled  to  receiver  before  judgment ;  nor  when  there 

is  a  remedy  at  law. 

302.  Prior  hen  of  judgment  creditor  not  divested  or  affected  by  re- 

ceivership ;  title  to  real  estate  not  divested ;  corporation  not  dis- 
solved. 

303.  Title  divested  by  appointment  of  receiver  on  final  dissolution ; 

departure  from  common-law  rule. 

304.  Waste  of  trust  fund  by  officers  of  insurance  and  loan  association, 

ground  for  receiver ;  insolvency  and  assignment. 

305.  Receivers  in  behalf  of  creditors  of  foreign  corporations. 

306.  Receiver  appointed  in  one  state  over  assets  of  corporation  organ- 

ized in  another  state. 

307.  In  proceedings  by  quo  warranto  against  corporation,  receiver  not 

appointed  before  judgment  of  forfeiture. 

308.  Corporation  allowed  to  give  bond  to  judgment  creditor  in  lieu 

of  receiver ;  case  retained  for  accounting. 

309.  Appointment  of  receiver  no  defense  to  action  against  shareholder 

for  unpaid  subscription. 

310.  Registration  of  shares  in  receiver's  hands. 

311.  Receiver  not  granted  over  dividends  due  from  college  fellowship. 

312.  One  corporation  may  be  appointed  receiver  over  another. 
312  a.  Duty  of  officers  to  deliver  assets  to  receiver. 

§  287.  In  most  of  the  states  of  this  country,  as  well  as 
in  England,  the  jurisdiction  of  courts  of  equity  over  corpo- 
rations has  been  extended  by  legislative  enactments  to  the 
appointing  of  receivers  and  sequestrating  the  property  of 
the  corporation,  in  proper  cases ;  and  in  some  of  the  states 
the  jurisdiction  has  even  been  enlarged  by  statute  to  the  ex- 
tent of  winding  up  the  affairs  of  the  corporation,  and  to  the 
forfeiture  of  its  franchise.  While  these  legislative  enact- 
ments vary  largely  in  the  different  states,  their  general  pur- 
pose and  scope  are  to  provide  a  more  effectual  method  for 
the  protection  of  creditors  and  shareholders  than  can  be 
had  by  the  ordinary  process  of  courts  of  law.  And  while  in 
the  decisions  of  the  courts  under  these  various  statutes,  there 
is  sometimes  manifested  a  lack  of  harmony  and  uniformity, 
certain  well-defined  principles  have  yet  been  established 
which  serve  as  precedents  for  future  guidance,  and  the  dis- 
cussion of  these  will  occupy  the  present  chapter. 


228  RECEIVERS.  [CHAP.  X. 

§  28S.  It  is  to  be  observed,  at  the  outset,  that  the  general 
jurisdiction  of  equity  over  corporate  bodies  does  not  extend 
to  the  power  of  dissolving  the  corporation,  or  of  winding 
up  its  affairs  and  sequestrating  the  corporate  property  and 
effects,  in  the  absence  of  express  statutory  authority.  And 
courts  of  equity  will  not,  ordinarily,  by  virtue  of  their  gen- 
eral equitable  jurisdiction,  or  of  their  visitatorial  powers 
over  corporate  bodies,  sequestrate  the  effects  of  the  corpo- 
ration, or  take  the  management  of  its  affairs  from  the  hands 
of  its  own  officers  and  entrust  it  to  the  control  of  a  receiver 
of  the  court,  upon  the  application  either  of  creditors  or 
shareholders.1  And  while  equity  may  properly  compel  offi- 
cers of  corporations  to  account  for  any  breach  of  trust  in 
their  official  capacity,  yet  in  the  absence  of  statutes  extend- 
ing its  iurisdiction,  it  will  usually  decline  to  assume  control 
over  the  management  of  the  affairs  of  a  corporation,  upon 
a  bill  filed  by  a  stockholder  alleging  fraud,  mismanagement 
and  collusion  on  the  part  of  the  corporate  authorities,  since 
such  interference  would  necessarily  result  in  the  dissolution 
of  the  corporation,  and  the  court  would  thus  accomplish  in- 
directly what  it  has  no  power  to  do  directly.  The  remedial 
power  exercised  by  courts  of  equity,  in  such  cases,  ordinarily 
extends  no  further  than  the  granting  of  an  injunction 
against  any  special  misconduct  on  the  part  of  the  corporate 
officers,  and  although  the  facts  shown  may  be  sufficient 
foundation  for  such  an  injunction,  the  court  will  not  en- 
large its  jurisdiction  by  taking  the  affairs  of  the  corpora- 
tion out  of  the  management  of  its  own  officers,  and  placing 
them  in  the  hands  of  a  receiver.2 

1  Bangs  v.  Mcintosh,  23  Barb.,  Mass.,  194.  But  see  Blatchford  v. 
591 ;  Howe  v.  Deuel,  43  Barb.,  504;  Ross,  54  Barb.,  42;  S.  C,  5  Ab.  Pr., 
Waterburyy.  Merchants  Union  Ex-  N.  S.,  434,  37  How.  Pr.,  110;  Ad- 
press  Co.,  50  Barb.,  157;  Belmont  ler  v.  Milwaukee  Patent  Brick  Man- 
v.  Erie  R.  Co.,  52  Barb.,  637;  Neall  ufacturing  Co.,  13 Wis.,  57. 
v.  Hill,  16  Cal.,  145;  French  Bank  2  Waterbury  v.  Merchants  Union 
Case,  53  Cal.,  495.  See,  also,  Baker  Express  Co.,  50  Barb.,  157 ;  Neall  v. 
v.  Administrator  of  Backus,  32  ni.,  Hill,  16  Cal.,  145;  Howe  v.  Deuel, 
79;  Pond  v.  F.  &  L.  R.  Co.,  130  43  Barb.,  504;  Belmont  v.  Erie  R. 


CHAT.  X.] 


COKPOEATIONS. 


229 


§  289.  Where  the  jurisdiction  of  courts  of  equity  has 
been  extended  by  legislation  to  the  appointment  of  receivers 
over  incorporated  companies,  the  power  thus  conferred  is 
treated  by  the  courts  as  a  delegated  authority,  the  exercise 
of  which  requires  the  most  careful  consideration.  The 
effect  of  appointing  a  receiver  being  to  take  the  property  of 
the  corporation  out  of  the  control  of  its  own  officers,  to 
whom  it  has  been  entrusted  by  its  stockholders,  the  courts 
proceed  with  extreme  caution  in  the  exercise  of  so  summary 
a  power.1  And,  in  construing  such  statutes,  they  are  in- 
clined to  give  them  a  strict  construction,  and  require  the 
prescribed  method  of  obtaining  jurisdiction  of  the  person 
and  of  the  subject-matter  to  be  strictly  followed.     Thus, 


Co.,  52  Barb.,  637.  Waterbury  v. 
Merchants  Union  Express  Co.,  50 
Barb.,  157,  was  an  action  brought 
by  a  stockholder  of  the  defendant 
corporation,  against  the  company 
and  its  executive  or  managing  com- 
mittee, to  obtain  a  dissolution  of 
the  corporation  and  the  appoint- 
ment of  a  receiver  for  winding  up 
its  affairs.  Barnard,  J.,  denying 
the  motion  for  a  receiver,  observes, 
p.  166:  "The  remaining  grounds 
for  the  relief  which  the  plaintiff 
demands  resolve  themselves  into 
the  alleged  personal  misconduct  of 
the  executive  or  managing  commit- 
tee. This  has,  I  think,  nothing  to 
do  with  the  present  motion  for  a 
receiver.  The  infidelity  or  miscon- 
duct of  some,  or  even  of  all,  of  the 
trustees  or  managers  of  such  an  as- 
sociation, affords  no  ground  for 
taking  away  the  rights  of  the  share- 
holders who  constitute  the  com- 
pany, either  by  dissolving  it,  or  tak- 
ing away  its  management  and 
placing  it  in  the  hands  of  an  officer 
of  the  court.  In  such  a  case,  the 
principles  of  remedial  or  prevent- 
ive justice  go  no  further  than  to 


enjoin  or  forbid  the  misconduct,  or 
remove  the  unfaithful  officer.  I  am 
not  aware  of  any  authority  for  dis- 
solving a  corporation,  or  an  unincor- 
porated stock  association,  or  for 
taking  its  management  from  its 
proprietors  or  shareholders,  on  the 
mere  ground  that  one,  or  even  afi, 
of  its  trustees,  are  unfaithful.  The 
court  may  enjoin  the  trustee,  or 
suspend  'and  remove  him,  and  if 
necessary  may  order  a  new  elec- 
tion, but  can  not  substitute  its  own 
officer."  But  in  Blatchford  v.  Ross, 
54  Barb.,  42;  S.  C,  5  Ab.  Pr.,  N. 
S.,  434,  37  How.  Pr.,  110,  the  court 
inclined  to  the  opinion  that  the  ac- 
tion of  the  executive  committee  of 
a  corporation  in  repeatedly  voting 
to  themselves  large  sums  of  money 
in  addition  to  their  regular  com- 
pensation, for  their  services  as  pro- 
moters or  originators  of  the  com- 
pany, was  sufficient  ground  for  ap- 
pointing a  receiver  in  behalf  of 
stockholders,  but  a  decision  as  to 
the  appointment  was  reserved  on 
other  grounds. 

i  Oakley    v.    Paterson    Bank,    1 
Green  Ch.,  173. 


230  RECEIVERS.  [CHAP.  X. 

where  a  statute  authorizes  the  court,  upon  application  of 
any  judgment  creditor  of  a  corporation,  after  execution  re- 
turned unsatisfied,  to  sequestrate  the  property,  stock  and 
choses  in  action  of  the  corporation,  and  to  appoint  a  re- 
ceiver, the  statute  will  be  strictly  construed,  since  the  exer- 
cise of  the  jurisdiction  which  it  confers  involves  the  virtual 
dissolution  of  the  corporate  body,  and  the  loss  of  its  fran- 
chises.1 And  when  the  statute  authorizes  the  court  to 
interfere  upon  the  petition  of  the  person  obtaining  such 
judgment,  the  court  can  not  acquire  jurisdiction  by  any  other 
means  than  a  petition  by  the  judgment  creditor  himself, 
and  a  petition  by  his  attorney  will  not  suffice.2  And  it  by 
no  means  follows,  because  an  injunction  has  been  granted 
against  the  operations  of  the  corporate  body,  that  a  receiver 
should  necessarily  be  appointed,  since  the  two  questions  are 
independent  of  and  distinct  from  each  other,  and  circum- 
stances may  call  for  and  demand  a  suspension  of  the  business 
of  the  corporation,  while  its  officers  in  charge  are  not  impli- 
cated, and  are  the  most  proper  persons  to  wind  up  its  affairs.3 
§  290.  Since  the  appointment  of  a  receiver  over  a  cor- 
poration is  generally  equivalent  to  a  suspension  of  its  cor- 
porate functions,  and 'of  all  authority  over  its  property  and 
effects,  and  is  also  equivalent  to  an  injunction  restraining 
its  agents  and  officers  from  intermeddling  with  its  property, 
the  courts  will  not  exercise  this  extraordinary  power  when 
the  corporate  body,  as  such,  is  not  made  a  party  to  the 
action,  and  is  not  before  the  court.4  And  this  is  true,  even 
when  the  bill  is  filed  against  the  stockholders  of  the  com- 
pany, assailing  the  franchise  itself,  and  asserting  that  the 
company  is  not  a  corporation  proper,  but  a  mere  partner- 
ship. The  object  of  such  a  proceeding  being  to  take  away 
the  corporate  franchise,  the  corporation  itself  must  be  made 

1  Bangs  v.   Mcintosh,   23  Barb.,        3  Oakley    v.    Paterson    Bank,    1 
591.  Green  Ch.,  173. 

2  Bangs  v.   Mcintosh,   23  Barb.,        4  Gravenstine's  Appeal,  49  Pa.  St., 
591.  310;    Baker    v.    Administrator    of 

Backus,  32  Ml.,  79. 


CHAP.  X.]  CORPOEATIONS.  231 

a  party  defendant  to  enable  it  to  be  heard;  and,  being  an 
indispensable  party  to  the  proceedings,  the  omission  to  join 
it  is  not  a  mere  formal  error,  but  one  of  substance,  which 
may  be  taken  advantage  of  by  the  stockholders  on  writ  of 
error.1 

§  291.  Notwithstanding  the  corporation  over  which  a 
receiver  is  sought  is  itself  an  indispensable  party  to  the  suit, 
as  above  shown,  yet  when  a  receiver  has  already  been  ap- 
pointed, he  need  not  be  joined  as  a  party  to  subsequent  pro- 
ceedings having  for  their  object  the  appointment  of  a 
receiver  over  the  same  corporation.  Thus,  upon  a  bill  filed 
against  a  banking  association  by  one  of  its  creditors,  charg- 
ing that  defendants  are  only  a  nominal  or  pretended  cor- 
poration, having  fraudulently  combined  to  deceive  their 
creditors,  and  being  only  a  voluntary  association  in  the 
nature  of  a  partnership,  it  is  not  necessary  to  join  as  a  party 
defendant  a  receiver  of  the  bank  appointed  upon  proceed- 
ings instituted  by  another  creditor.  Nor  is  such  a  bill  de- 
murrable because  it  prays  the  appointment  of  a  receiver, 
since,  whether  a  receiver  be  or  be  not  necessary,  the  objec- 
tion because  of  the  prayer  for  his  appointment  can  not 
sustain  a  demurrer.2 

§  292.  It  has  already  been  shown  that  courts  of  equity 
proceed  with  extreme  caution  in  the  appointment  of  re- 
ceivers over  corporate  bodies,  under  legislative  enactments 
enlarging  their  general  jurisdiction  for  this  purpose.3  And 
in  proceedings  under  such  statutes,  mere  general  allegations 
in  the  affidavits  in  support  of  the  motion  for  a  receiver,  as 
to  the  belief  of  affiants  that  great  frauds  have  been  commit- 
ted, are  not  sufficient  ground  for  the  interference,  when  it  is 
not  stated  in  what  the  frauds  consist,  or  by  whom  they 
were  committed.4  Nor  is  there  any  necessity  for  appointing 
a  receiver  when  no  fraud  is  alleged  or  shown,  and  when  no 

1  Baker     v.     Administrator     of  3  See  §  289,  ante. 

Backus,  32  111.,  79.  <  Oakley    v-    Paterson    Bank,   1 

-  Wheeler  v.  Clinton  Canal  Bank,  Green  Ch.,  173. 
Ilarring.  (Mich.),  449. 


232  KECEIVEKS.  [CHAP.  X. 

satisfactory  proof  is  produced  that  the  court  should  inter- 
fere to  save  the  property  from  material  injury,  or  to  rescue 
it  from  impending  destruction.1  If,  however,  the  corpora- 
tion is  insolvent  and  its  directors  have  been  guilty  of  fraudu- 
lent mismanagement  of  its  affairs,  and  if  it  has  ceased  to 
transact  the  business  for  which  it  was  incorporated,  its 
financial  embarrassments  being  such  as  to  render  it  im- 
practicable to  resume,  a  fit  case  is  presented  for  a  receiver, 
in  order  to  preserve  the  property  of  the  corporation  for  the 
benefit  of  its  creditors  and  stockholders.2 

§  293.  In  Kew  York,  the  jurisdiction  over  corporations 
conferred  by  statute  upon  courts  of  equity  powers  is  suffi- 
cient to  authorize  the  appointing  of  a  receiver,  when  it  is 
apparent  that  the  corporation  has  ceased  to  act  as  such,  and 
when  the  president  and  principal  shareholders  have  assumed 
to  use  the  corporate  property  as  their  own,  and  the  president 
has  been  guilty  of  a  breach  of  trust  in  making  an  assign- 
ment of  such  property.3  So  when  it  is  apparent  to  the 
court  that  the  corporation  against  which  the  proceedings 
are  instituted  is  without  any  office  or  place  of  business,  that 
it  has  no  officers  to  attend  to  its  affairs  and  no  person  au- 
thorized to  take  charge  of  and  manage  its  business,  it  is 
proper  to  appoint  a  receiver,  upon  a  bill  by  a  stockholder,  to 
preserve  the  effects  of  the  company  for  the  benefit  of  the 
stockholders  generally.4  And  when  a  banking  association 
has  issued  notes,  which  are  unauthorized  and  expressly  pro- 
hibited by  the  banking  laws  of  the  state,  and  has  secured 
these  notes  by  a  deed  of  trust  of  certain  securities,  upon  a 
bill  to  set  aside  such  trust  deed  the  court  may  appoint  a  re- 
ceiver in  limine,  to  take  charge  of  the  securities  assigned 
until  the  final  determination  of  the  cause  upon  its  merits.5 
So  in  an  action  brought  by  creditors  of  a  pretended  bank- 

1  Baker  v.  Administrator  of  4  Lawrence  v.  Greenwich  Fire  In- 
Backus,  32111.,  79.  surance  Co.,  1  Paige,  587. 

2  Coal  &  Alining  Co.  v.  Edwards,  5  Leavitt  v.  Yates,  4  Edw.  Ch., 
103  111.,  472.  173, 175. 

3  Conro  v.  Gray,  4  How.  Pr.,  166. 


CHAT.  X.]  CORPORATIONS.  233 

ing  corporation  averring  that  the  bank  was  never  incorpo- 
rated, but  transacted  business  under  a  corporate  name  under 
the  management  of  its  principal  promoter,  its  supposed 
assets  being  in  fact  his,  and  averring  his  death  and  that  his 
representative  is  wasting  his  assets,  the  bill  seeking  to  set 
aside  certain  judgments  and  to  recover  the  assets  and  for  an 
accounting,  a  proper  case  is  presented  for  the  appointment 
of  a  receiver  pendente  lite.1 

§  294.  While  receivers  are  thus  allowed  under  the  New 
York  practice,  for  the  protection  of  shareholders  in  certain 
classes  of  cases,  the  courts  proceed  with  much  caution  in 
the  exercise  of  the  jurisdiction.  And  in  an  action  brought 
by  a  shareholder  for  the  purpose  of  canceling  certain  shares 
of  stock,  alleged  to  have  been  illegally  issued  by  the  cor- 
poration, and  to  restrain  the  holders  of  such  shares  from 
assigning  or  encumbering  them,  the  appointment  of  a  re- 
ceiver of  the  shares  in  controversy  is  unauthorized  and  im- 
proper, upon  an  ex  parte  application,  before  answer,  and 
when  it  is  not  shown  that  defendants  are  irresponsible,  or 
that  there  is  any  danger  of  loss  from  the  transfer  of  the 
stock.2  Nor  is  a  former  shareholder  entitled  to  a  receiver 
as  against  trustees  or  officers  of  the  corporation,  upon  the 
ground  of  a  mismanagement  of  their  trust,  when  he  has 
sold  and  parted  with  his  entire  interest  in  the  corporation 
and  in  its  effects.3 

§  295.  It  is  also  to  be  observed,  with  reference  to  this 
species  of  relief  when  sought  in  behalf  of  shareholders  of 
a  corporation,  that  the  acquiescence  or  consent  of  a  share- 
holder for  a  long  period  of  years  in  any  given  state  of  facts 
or  conduct  on  the  part  of  the  corporate  authorities,  which 
he  afterward  seeks  to  make  the  foundation  for  the  appoint- 
ment of  a  receiver,  will  generally  prove  a  bar  to  the  relief 
sought.4     For  example,  when  the  authorities  of  a  corpora- 

iDobson  v.  Simonton,  78  N.  C,  3  Smith  v.  Wells,  20  How.   Pr., 

63.  158. 

2  People    v.    Albany  &    Susque-  4  Gray  v.  Chaplin,  2  Russ.,  126; 

hanna  R.  Co.,  7  Ab.  Pr.,  N.  S.,  290.  Hager  v.  Stevens,  2  Halst.  Ch.,  374. 


234  RECEIVERS.  [CHAP.  X. 

tion  have  made  an  agreement  in  the  nature  of  a  lease,  for 
letting  the  tolls  of  the  company  for  a  longer  period  than 
the}'  are  authorized  to  do  under  the  act  of  incorporation, 
but  such  agreement  is  acquiesced  in  b}T  the  shareholders  for 
a  period  of  forty -seven  years  without  objection  or  complaint, 
during  which  time  the  lessee  and  his  successors  have  re- 
mained in  undisturbed  possession  and  receipt  of  the  tolls, 
equity  will  not  appoint  a  receiver  of  the  rents  and  tolls  m 
Urn  ine,  in  an  action  by  a  shareholder  to  set  aside  the  agree- 
ment or  lease.1  So  when  a  shareholder  files  a  bill  for  a  re- 
ceiver to  take  charge  of  certain  real  estate  in  another  state, 
alleged  to  have  been  purchased  with  the  funds  of  the  cor- 
poration and  the  title  taken  in  the  name  of  another  person, 
when  the  situation  of  the  title  has  remained  unchanged  for 
a  number  of  years,  during  all  which  time  the  plaintiff  has 
been  a  shareholder,  and  no  greater  danger  is  shown  to  the 
title  than  has  existed  during  all  this  period,  and  it  is  not 
shown  that  the  person  holding  the  legal  title  is  insolvent, 
no  sufficient  cause  is  presented  for  the  extraordinary  aid  of 
the  court  by  a  receiver.  Especially  will  the  court  be  justi- 
fied in  refusing  to  interfere  in  such  case,  when  it  is  apparent 
from  the  bill  that  the  property  over  which  the  receiver  is 
sought  was  accumulated  by  fraud,  of  which  the  plaintiff 
shareholder  was  himself  cognizant.2  And  a  shareholder 
seeking  a  receiver  over  a  corporation,  upon  the  ground  of 
misconduct  or  breach  of  trust  on  the  part  of  its  officers, 
must  himself  be  free  from  participation  in  such  misconduct.3 
§  296.  The  propriety  of  the  relief  as  against  corpora- 
tions is  sometimes  determined  by  the  legislation  or  decisions 
of  other  states,  in  which  the  association  was  incorporated, 
upon  the  matter  urged  as  a  ground  for  a  receiver.  Thus, 
in  an  action  brought  by  holders  of  the  original  stock  of  a 
corporation  created  by  and  under  the  laws  of  other  states, 
to  set  aside  a  new  issue  of  stock  made  by  the  corporation, 

1  Gray  v.  Chaplin,  2  Russ.,  126.  3Hycle  Park  Gas  Co.  v.  Kerber,  5 

2Hager  v.  Stevens,  2  Halst.  Ch.,    Bradw.,  132. 
374. 


CHAP.  X.J  CORPORATIONS.  235 

it  is  not  proper  to  grant  an  injunction  against  the  action  of 
the  corporate  officers  and  to  appoint  a  receiver  of  the  new 
issue,  when  the  states  in  which  the  company  was  incorpo- 
rated, have,  by  legislative  action  and  by  the  decision  of  a 
court  of  last  resort,  ratified  the  acts  of  the  corporation  in 
issuing  the  new  stock,  and  have  declared  it  to  be  legal.1 

§  297.  Where  the  statutes  of  a  state  authorize  and  pro- 
vide for  appointing  receivers  in  proceedings  against  corpo- 
rations whose  charters  have  expired,  the  courts  being  vested 
with  full  jurisdiction  in  equity  for  that  purpose,  and  being 
fully  empowered  by  statute  to  make  all  orders  necessary  for 
the  enforcement  of  the  trust,  and  the  statute  requiring  the 
receiver  to  divide  the  fund  collected  among  the  creditors 
2>ro  rata,  the  remedy  thus  provided  is  regarded,  in  effect,  as 
a  method  of  sequestration  for  the  benefit  of  all  the  creditors 
of  the  corporation.  In  such  case,  attaching  creditors  of  the 
property  of  the  corporation  can  not  acquire  valid  liens,  so 
as  to  prevent  the  receivers  from  selling  the  property  and 
applying  the  proceeds  in  payment  of  all  the  creditors.  And 
the  mode  of  sequestration  thus  afforded  by  the  statute  will 
be  held  to  take  effect  as  against  attaching  creditors,  even 
though  they  may  have  attached  before  the  receivers  were 
actually  appointed,  but  after  the  filing  of  the  bill  and  the 
issuing  of  an  injunction  restraining  the  corporation  from 
further  conducting  its  affairs.2  But  when  a  corporation  be- 
comes extinct  by  virtue  of  an  act  of  legislature,  its  assets 
and  powers  being  transferred  to  a  new  corporation,  the 
courts  are  powerless,  upon  an  ex  parte  application,  to  appoint 
a  receiver  over  the  former  corporation,  it  having  ceased  to 
exist,  and  there  being  no  person  competent  to  represent  it, 
the  new  corporation  not  being  made  a  party  to  the  action.3 

1  O'Brien  v.  Chicago,  Rock  Island  an  insurance  company  under  the 
&  Pacific  R.  Co.,  53  Barb.,  568.  laws  of  New  Jersey,  when  the coni- 

2  Atlas  Bank  v.  Nahant  Bank,  23  pany  has  ceased  to  do  business,  see 
Pick.,  480.  Streit  v.  Citizens    Fire  Insurance 

3  Young  v.  Rollins,  85  N.  C,  485.  Co.,  29  N.  J.  Eq.,  21. 
As  to  the  right  to  a  receiver  over 


236  KECEIVEKS.  [CI1AP.  X. 

§  298.  The  right  of  judgment  creditors  of  a  corporation 
to  a  sequestration  of  the  corporate  effects  and  to  a  receiver, 
in  aid  of  their  judgments  at  law  after  execution  returned 
unsatisfied,  is  a  right  which  is  given  by  statute  in  many  if 
not  in  most  of  the  states ;  and  it  may  be  regarded  as  an  ex- 
tension or  enlargement  of  the  general  jurisdiction  of  courts 
of  equity,  which,  as  already  shown,  does  not  extend  to 
sequestrating  the  property  and  winding  up  the  business  of 
the  corporation.1  It  is  inconsistent  with  the  purpose  and 
scope  of  this  work  to  attempt  any  discussion  of  these  vari- 
ous statutes,  and  it  is  believed  that  each  practitioner  is  suffi- 
ciently familiar  with  the  legislation  and  practice  of  his  own 
state  to  render  any  such  discussion  unnecessary  in  the 
present  treatise.  And  it  will  be  sufficient,  for  the  purposes 
of  the  present  work,  to  present  the  principles  deduced  from 
the  decisions  in  the  various  states,  without  attempting  to 
discuss  or  to  analyze  the  statutes,  which  are  undergoing  con- 
stant modification  and  change. 

§  299.  It  is  held  in  Wisconsin,  that  a  creditor  of  a  cor- 
poration who  has  established  his  demand  by  judgment  at 
law,  may,  after  execution  returned  unsatisfied  in  whole  or 
in  part,  file  a  bill  in  behalf  of  himself  and  such  other  cred- 
itors of  the  corporation  as  may  elect  to  become  parties 
thereto,  against  both  the  corporation  and  its  delinquent  or 
withdrawing  shareholders,  upon  which  he  may  have  a  de- 
cree for  an  account  of  the  assets  and  liabilities  of  the  cor- 
poration, and  a  receiver.  And  the  officers  and  shareholders 
will  be  required  to  pay  in  and  account  to  the  receiver  for  so 
much  of  the  capital  stock  as  will  be  sufficient  to  pay  plaint- 
iff's judgment,  and  the  debts  of  such  other  creditors  as  may 
choose  to  come  in  under  the  decree.  In  such  case,  the 
maxim  of  the  law  that  "equality  is  equity"  applies,  and  the 
creditors  must  all  share  alike  in  the  funds  realized,  in  pro- 
portion to  the  amount  of  their  respective  claims.2 

i  See  §  288,  ante,  and  cases  cited.     57.     The    jurisdiction     of   equity, 
2Adler    v.    Milwaukee   Patent    in  this  class  of  cases,   is  said  by- 
Brick  Manufacturing  Co.,  13  Wis.,    Dixon,  C.  J.,  delivering  the  opin- 


CHAP.  X.] 


CORPORATIONS. 


237 


§  300.  The  question  of  the  extent  to  which  equity  will 
interfere  with  the  tolls  and  franchise  of  a  corporation,  such 
as  a  bridge  company,  in  aid  of  judgment  creditors,  where 
the  chief  value  consists  in  such  tolls  or  franchise,  is  not  al- 
together free  from  difficulty.  But  it  is  held  by  the  Supreme 
Court  of  the  United  States,  that  where  the  rents  and  profits 
of  the  company  for  a  given  period  are  sold  under  execution, 
and  purchased  by  the  judgment  creditor,  he,  with  other 
judgment  creditors,  may,  upon  a  bill  in  equity,  have  a  re- 
ceiver to  collect  the  tolls  and  pay  them  into  court,  to  the 
end  of  discharging  the  judgment  indebtedness.  And  the 
relief  is  extended,  in  such  case,  upon  the  ground  of  the  in- 
adequacy of  the  remedy  at  law  and  the  difficulty  of  obtain- 
ing complete  satisfaction  of  the  judgments  without  the  aid 
of  equity.1 


ion,  to  exist  at  common  law  and 
independent  of  statutory  author- 
ity, "  as  a  sort  of  distinct  exercise 
of  equitable  jurisprudence."  As 
regards  the  remedy  against  delin- 
quent shareholders,  the  statement 
is  doubtless  true.  But  the  asser- 
tion that  the  jurisdiction  of  equity 
by  sequestrating  the  property  of 
the  corporation,  and  appointing  a 
receiver  to  wind  up  its  concerns, 
exists  at  common  law  and  inde- 
pendent of  statute  is  certainly  un- 
supported by  the  weight  of  author- 
ity, as  already  shown.  See  §  288, 
ante,  and  cases  cited.  Nor  does  the 
assertion  of  this  doctrine  seem  to 
have  been  necessary  to  the  decision 
of  the  case,  as  regards  the  appoint- 
ment of  a  receiver,  since  the  power 
of  appointment  in  this  class  of 
cases  was  expressly  conferred  by 
statute. 

1  Covington  Drawbridge  Co.  v. 
Shepherd,  21  How.,  112.  In  this 
case,  the  corporation  was  created 
by  act  of  legislature  of  the  state  of 


Indiana,  and  built  a  drawbridge 
over  the  Wabash  river  in  that  state, 
pursuant  to  its  charter.  Judg- 
ments were  had  against  the  corpo- 
ration in  the  United  States  circuit 
court  for  the  district  of  Indiana, 
under  which  execution  was  levied 
upon  the  bridge  as  real  property, 
and  the  marshal  sold  the  rents  and 
profits  of  the  bridge  under  the  ex- 
ecution for  the  term  of  one  year, 
the  execution  creditor  becoming 
the  purchaser.  He,  with  other 
judgment  creditors,  then  filed  a 
bill  in  the  United  States  circuit 
court  and  obtained  a  decree  ap- 
pointing a  receiver,  with  directions 
to  take  possession  of  the  bridge,  re- 
ceive its  tolls  and  pay  them  into 
court,  to  be  applied  in  satisfaction 
of  the  judgments  pro  rata.  Upon 
appeal,  the  decree  was  sustained, 
the  court,  Catron,  J.,  using  the 
following  language,  p.  124:  .  . 
"By  the  laws  of  Indiana,  lands 
and  tenements  can  not  be  sold 
under  execution  until  the  rents  and 


238 


RECEIVERS. 


[CHAP.  X. 


§  301.  In  New  York,  it  is  held  that  a  creditor  at  large, 
i.  <?.,  before  judgment,  of  a  manufacturing  corporation,  is 
not  entitled  to  a  receiver  in  an  action  brought  by  him  for  a 
dissolution  of  the  corporation  and  a  sequestration  of  its 
effects,  upon  the  ground  of  insolvency  and  suffering  other 
creditors  to  obtain  a  preference.1  And  it  may  be  stated  as 
a  general  proposition,  founded  upon  established  principles 
of  equity,  that  a  creditor  of  a  corporation  is  not  entitled  to 
the  extraordinary  aid  of  equity  in  the  enforcement  of  his 
demand,  when  he  can  obtain  full  and  adequate  relief  at  law. 
Where,  therefore,  proceedings  are  instituted  by  a  creditor 
of  a  banking  corporation  for  the  appointment  of  a  receiver 
to  wind  up  its  affairs,  but  it  is  apparent  from  his  bill  that 

profits  thereof  for  a  term  not  ex- 
ceeding seven  years  shall  have  been 
first  offered  for  sale  at  public  auc- 
tion; and  if  that  term,  or  a  less 
one,  will  not  satisfy  the  execution, 
then  the  debtor's  interest  or  estate 
in  the  land  may  be  sold,  provided 
it  brings  two-thirds  of  its  appraised 
value.  The  tolls,  under  the  idea 
that  they  were  rents  and  profits  of 
the  bridge,  were  sold  for  one  year, 
according  to  the  forms  of  this  law. 
The  tolls  of  the  bridge  being  a 
franchise,  and  sole  right  in  the  cor- 
poration, and  the  bridge  a  mere 
easement,  the  corporation  not  own- 
ing the  fee  in  the  land  at  either 
bank  of  the  river,  or  under  the 
water,  it  is  difficult  to  say  how  an 
execution  could  attach  to  either  the 
franchise  or  the  structure  of  the 
bi-idge  as  real  or  personal  property. 
This  is  a  question  that  this  court 
may  well  leave  to  the  tribunals  of 
Indiana  to  decide  on  their  own 
laws,  should  it  become  necessary. 
One  thing,  however,  is  plainly 
manifest,  that  the  remedy  at  law 
of  these  execution  creditors  is  ex- 
ceedingly embarrassed,  and  we  do 


not  see  how  they  can  obtain  satis- 
faction of  their  judgments  from 
this  corporation  (owning  no  corpo- 
rate property  but  this  bridge),  un- 
less equity  can  afford  relief.  .  . 
All  that  we  are  called  on  to  decide 
in  this  case  is  that  the  court  below 
had  power  to  cause  possession  to 
be  taken  of  the  bridge,  to  appoint 
a  receiver  to  collect  tolls  and  pay 
them  into  court,  to  the  end  of  dis- 
charging the  judgments  at  law; 
and  our  opinion  is  that  the  power 
to  do  so  exists,  and  that  it  was 
properly  exercised.  It  is,  there- 
fore, ordered  that  the  decree  below 
be  affirmed,  and  the  circuit  court 
is  directed  to  proceed  to  execute 
its  decree." 

1  Galwey  v.  United  States  Steam 
Sugar  Refining  Co.,  13  Ab.  Pr., 
211.  As  to  the  power  of  the  courts 
of  New  York,  under  a  statute  of  the 
state,  to  appoint  a  receiver  over  a 
corporation  which  had  been  dis- 
solved, upon  the  ground  of  delay 
on  the  part  of  the  trustees  ap- 
pointed to  wind  up  its  affairs,  see 
In  re  Pontius,  26  Hun,  232. 


CHAP.  X.]  CORPORATIONS.  239 

whatever  rights  he  may  have  are  cognizable  at  law,  and 
may  be  remedied  by  following  the  mode  pointed  out  by 
law  for  that  purpose,  the  application  for  a  receiver  will  be 
denied,  and  the  creditor  will  be  left  to  pursue  his  legal 
remedy.1 

§  302.  As  regards  the  effect  of  appointing  a  receiver 
over  a  corporation,  upon  the  lien  previously  acquired  by  a 
judgment  creditor,  the  rule  in  Indiana  is,  that  the  appoint- 
ment does  not  operate  to  divest  or  affect  the  judgment  lien. 
And  where  a  judgment  creditor  can  enforce  his  judgment 
in  the  ordinary  way,  by  levy  upon  and  sale  of  the  real  estate 
of  the  corporation  on  which  his  judgment  is  a  lien,  the  court 
may  properly  refuse  to  grant  an  order  upon  the  receiver  to 
pay  the  judgment  out  of  moneys  in  his  hands,  when  it  is 
not  shown  that  such  moneys  are  the  proceeds  of  a  sale  of 
the  property  upon  which  the  judgment  was  a  lien.2  A 
somewhat  similar  doctrine  prevails  in  Michigan,  and  it  is 
there  held  that  a  receivership  of  a  corporation  pendente  lite, 
and  before  a  final  decree  of  forfeiture,  is  merely  conditional 
and  inchoate,  the  right  of  the  receiver  being  only  a  pos- 
sessory right  for  the  purposes  of  the  suit.  His  appoint- 
ment, therefore,  does  not  divest  the  title  of  the  corporation 
to  its  real  estate,  and  when  no  assignment  of  such  title  is 
ever  made  by  the  corporation  to  the  receiver,  who  after- 
wards becomes  functus  officio,  the  real  estate  of  the  corpo- 
ration is  subject  to  the  lien  of  a  judgment  and  execution,  as 
if  there  had  never  been  a  receiver.3  And  the  appointment 
of  the  receiver  does  not  of  itself  have  the  effect  of  dissolving 
or  terminating  the  existence  of  the  corporation.4 

§  303.  While,  as  is  thus  seen,  the  appointment  of  a  re- 
ceiver pendente  lite,  and  before  final  dissolution  of  the  cor- 
poration, does  not  have  the  effect  of  divesting  the  title  to 

i  Parmly  v.  Tenth  Ward  Bank,  3  3  Montgomery  v.  Merrill,  18 
Edw.  Ch.,  395.  Mich.,  338. 

2  Southern  Bank  of  Kentucky  v.  4  Moseby  v.  Burrow,  52  Tex.,  396 ; 
Ohio  Insurance  Co.,  22  Ind.,  181.        Pringle  v.  Woolworth,  90  N.  Y., 

502. 


240  RECEIVERS.  [CHAP.  X. 

its  real  property,  a  different  effect  results  from  the  appoint- 
ment when  made  upon  final  dissolution  of  the  corporate 
body.  At  the  common  law,  upon  the  dissolution  or  civil 
death  of  a  corporation,  all  its  real  property  remaining  un- 
sold at  the  time  of  such  dissolution  reverted  to  the  original 
grantors  or  to  their  heirs,  the  reversion  being  a  condition 
annexed  by  law  and  resulting  from  the  failure  of  the  cause 
for  which  the  grant  was  made.1  The  common-law  rule, 
however,  is  now  almost  entirely  obsolete,  and  in  this  country 
the  disposition  to  be  made  of  the  corporate  property  upon 
dissolution  is  usually  regulated  by  legislative  enactments, 
having  for  their  object  the  protection  of  creditors  and  share- 
holders. And  the  general  tendency  of  the  legislation  and 
judicial  decisions  upon  this  subject  is  to  regard  all  the  prop- 
erty of  a  corporation,  upon  its  dissolution,  as  a  trust  fund 
pledged  to  the  payment  of  the  demands  of  creditors  and 
shareholders.2  Thus,  in  New  York,  the  common-law  rule, 
that  upon  dissolution  of  the  corporate  body  the  title  to  its 
realty  reverts  to  the  original  proprietors  or  grantors,  or  to 
their  heirs,  is  entirely  obsolete,  and  under  the  laws  of  that 
state,  the  title  to  all  the  property,  real  or  personal,  vests  in 
the  receiver  of  the  corporation  appointed  upon  its  dissolu- 
tion, for  the  benefit  of  the  creditors  and  shareholders.3 

§  304.  Where  creditors  of  a  corporation  have  a  charge 
upon  a  particular  fund  in  the  nature  of  a  trust  fund,  for  the 
satisfaction  of  their  demands,  the  mismanagement  and  waste 
of  such  fund  by  the  corporate  officers  entrusted  with  its  con- 
trol may  warrant  the  court  in  appointing  a  receiver  for  the 
preservation  of  the  property  pendente  lite.  For  example, 
upon  a  bill  filed  by  persons  insured  in  an  insurance  and  loan 
association,  against  the  directors  and  managers,  showing 
irross  mismanagement  upon  the  part  of  defendants,  and  that 
a  laro-e  portion  of  the  trust  funds  out  of  which  the  assured 
were  to  be  paid  had  been  lost  by  the  negligence  of  defend - 

1  Angell  &  Ames  on  Corporations,  '-  Angell  &  Ames  on  Corporations, 
§  779,  and  cases  cited.  §  779  a. 

3  Owen  v.  Smith,  31  Barb.,  641. 


cnAP.  x.l 


CORPORATIONS. 


241 


ants,  and  it  appearing  that  the  secretary  of  the  association 
had  absconded  with  a  large  amount  of  its  funds,  and  that 
there  was  great  danger  of  the  remainder  being  wasted,  the 
case  was  regarded  as  a  plain  one  for  an  injunction  and  a 
receiver.  And  the  aid  of  equity,  in  such  a  case,  is  founded 
upon  the  necessity  of  interfering  to  prevent  waste  of  the 
funds  in  question,  and  also  upon  the  breach  of  trust  of  the 
defendants  charged  with  the  management  of  the  trust  fund.1 


1  Evans  v.  Coventry,  5  DeG.,  M. 
&  G.,  911,  reversing S.  C,  3  Drew., 
75.  The  motion  for  an  injunction 
and  receiver  having  been  refused 
by  the  Vice-Chancellor,  his  decision 
was  reversed  by  the  lords  justices 
on  appeal,  and  a  receiver  and 
injunction  were  allowed.  The 
grounds  upon  which  the  interfer- 
ence was  based  were  stated  by  Lord 
Justice  Knight  Bruce,  as  follows, 
p.  910:  .  .  "The  application 
before  the  court  is  founded  on  the 
common  right  of  persons  who  are 
interested  in  property  which  is  in 
(J  anger  to  apply  for  its  protection. 
Upon  the  bill  and  answer  it  appeal's 
that  the  plaintiffs  are  interested  in 
the  funds  of  that  which  was  an 
association,  under  whatsoever  cir- 
cumstances of  honesty  or  dishon- 
esty constituted  or  carried  on,  but 
the  affairs  of  which  have  ceased  to 
be,  and  probably  can  never  again 
be,  in  a  state  of  activity.  It  was 
intimately  connected  with  another 
society,  or  alleged  society,  of  a  sub- 
sidiary nature.  The  defendants  are 
persons,  or  include  persons,  who 
owed  duties  to  those  represented 
by  the  plaintiffs  in  respect  of  the 
funds  of  the  society,  for  the  pur- 
pose of  care  and  protection.  Those 
duties  appear  to  have  been  aban- 
doned in  a  manner  deserving,  as  it 
would  at  present  appear,  the  st  r<  >ng- 
10 


est  observation.  This  has  led  to  a 
grievous  loss,  which  has  been  sus- 
tained by  persons  of  small  means 
and  in  humble  circumstances,  who 
are  ill  able  to  bear  it.  These  same 
defendants  have  now  under  their 
control,  or  in  their  power,  a  poor 
remnant  of  the  property  which 
they  have  so  ill  cared  for.  "What- 
ever may  be  the  specific  allegations 
or  want  of  specific  allegations  in 
the  bill,  the  true  and  necessary  re- 
sult of  the  entire  pleadings  as  they 
stand  is,  that  this  remnant  of  prop- 
erty is  in  danger.  In  my  judg- 
ment, the  objections  which  have 
been  argued  against  this  applica- 
tion, at  the  existing  stage  of  the 
cause,  might  be  urged  with  as 
much  reason,  as  much  force,  and 
as  much  effect,  if  this  were  an  ap- 
plication to  restrain  the  felling  of 
timber  or  the  destruction  of  a  house. 
It  is  a  case  of  waste,  partly  perpe- 
trated and  obviously  imminent. 
But  for  the  judgment  which  has 
been  given,  and  for  which  I  feel 
the  most  unaffected  respect,  I 
should  have  said,  from  my  experi- 
ence of  the  practice  of  the  courf  i;i 
Lord  Eldon's  time,  that  this  was  a 
plain  case  for  that  injunction,  and 
that  receiver,  which  I  think  ought 
now  to  be  granted."  And  Lord 
Justice  Turner  adds:  "  Whatever 
else  may  be  said  of  this  motion,  it 


242  RECEIVERS.  [CHAT.  X. 

So  the  insolvency  of  a  life  insurance  company  and  its  assign- 
ment of  all  its  property  to  a  trustee  for  its  creditors,  with- 
out the  authority  of  its  stockholders,  being  an  abandonment 
of  the  franchises  of  the  company,  constitute  sufficient  ground 
for  a  receiver  in  behalf  of  creditors.1 

§  305.  Under  the  New  York  code  of  procedure,  courts 
of  equity  jurisdiction  are  empowered  to  appoint  receivers 
over  the  effects  of  foreign  corporations,  upon  the  applica- 
tion of  judgment  creditors,  and  are  fully  authorized  to  take 
charge  of  the  property  of  such  corporations  in  order  to 
preserve  it  for  the  benefit  of  creditors  and  shareholders.2 
And  when  a  creditor  of  a  foreign  corporation  has  obtained 
judgment  against  the  company  in  the  state  where  it  is  in- 
corporated, and  in  aid  of  his  judgment  has  procured  the 
appointment  of  a  sequestrator  of  the  property  of  the  cor- 
poration in  that  state,  but  the  defendant  transfers  its  prop- 
erty and  assets  to  a  new  corporation  in  New  York,  upon  no 
other  consideration  than  shares  of  stock  in  the  new  com- 
pany, the  judgment  creditor  may  enforce  his  judgment 

can  not  be  said  that  any  argument  wyn's  argument,  that  a  breach  of 

has  been  omitted  which  could  be  trust  is  not  a  sufficient  ground  for 

urged  against  it.     What  the  court  the  interference  of   the  court  by 

has  to  look  at  is  the  position  of  the  the    appointment    of    a   receiver, 

parties  on  the  record.     According  Whether  the    plaintiffs   will   ulti- 

to  the  allegation  of  the  bill,  verified  ruately  establish  the  commission  of 

by  affidavit  or    admitted    by  the  a  breach  of  trust  is  not  the  question 

answer,   the  plaintiffs  are  in  the  now  before  the  court.     It  is  admit- 

position    of    parties    who    have  a  ted  that  funds  have  been  lost,  of 

charge  on  the  funds  of  what  I  may  which  it  was  the  duty  of  the  def  end- 

for  the  present    purpose  call   the  ants  to    take   care.     That   loss   is 

original  association.     The  defend-  prima  facie  evidence  of  a  breach  of 

ants  are  in  the  position  of  trustees  the  duty  of  the  defendants,  suffi- 

of  the  association.     It  appears  that  cient  to  authorize  the  interference 

funds  of  that  association  have  been  of  the  court  by  the  appointment  of 

lost  by  the  act  of  the  treasurer,  a  receiver." 

whose  conduct  it  was  the  duty  of  J  Buck  v.  Piedmont  &  Arlington 

the  other  defendants   to  superin-  Life  Insurance  Co.,  4  Fed.  Rep., 

tend.      Prima     facie,    therefore,  849;  S.  C,  4  Hughes.  415. 

there  appears  a  clear  case  for  the  2DeBemerv.  Drew,  57  Barb.,  438; 

interference  of  the  court ;  for  I  cer-  Murray  v.  Vanderbilt,   39   Barb., 

tainly  can  not  accede  to  Mr.  Sel-  140. 


CHAP.  X.]  CORPORATIONS.  243 

against  the  new  company  in  New  York,  and  may  have  a 
receiver  in  aid  of  such  proceedings.1  But  when  an  associa- 
tion, incorporated  in  a  foreign  country,  has  been  dissolved 
by  a  decree  or  order  of  the  government  of  that  country, 
but  the  decree  of  dissolution  is  not  absolute  and  still  leaves 
the  corporation  in  existence  for  certain  specified  purposes, 
and  it  has  property  within  the  limits  of  this  country  under 
control  of  its  officers  resident  here,  the  courts  of  this  country 
will  not  appoint  a  receiver  of  the  assets  here,  upon  grounds 
which  would  not  have  availed  for  that  purpose  in  the  for- 
eign country.2 

§  306.  It  is  held  in  New  York,  that  when  a  corporation 
is  created  in  -another  state  and  is  in  process  of  voluntary 
dissolution  there,  but  a  portion  of  its  assets  are  in  New 
York,  in  possession  of  some  of  its  officers  resident  there  and 
subject  to  the  jurisdiction  of  the  New  York  courts,  and  not 
amenable  to  the  courts  of  the  state  under  whose  laws  the 
corporation  was  created  and  exists,  upon  a  bill  by  stock- 
holders in  New  York  for  an  account  and  distribution,  the 
court  may  appoint  a  receiver  when  it  is  shown  that  the 
corporate  officers  in  New  York  are  insolvent,  and  that 
the  funds  are  in  jeopardy.  Under  such  circumstances,  the 
courts  of  New  York,  having  undoubted  jurisdiction  over 
the  officers  of  the  corporation  resident  in  that  state,  as  well 
as  the  property  there  located,  may  properly  interfere  to 
preserve  a  fund  which  is  endangered  by  the  insolvency  or 
improper  conduct  of  defendants.3 

1  Barclay  v.  Quicksilver  Mining  almost  in  a  sentence.  The  officers 
Co.,  9  Ab.  Pr.,N.  S.,283.  See,  also,  who  have  complete  control  of  a 
S.  C,  6  Lans.,  25.  foreign  corporation,  now  in  process 

2  Hamilton  v.  Accessory  Transit  of  voluntary  dissolution,  being  all 
Co.,  26  Barb.,  46.  And  see  Murray  residents  of  this  city  and  having 
r.  Vanderbilt,  39  Barb.,  140.  in    their   possession   here   certain 

3  Redmond  v.  Hoge,  3  Hun,  171.  funds  of  the  corporation,  which 
The  grounds  of  the  jurisdiction,  in  their  own  insolvency  has  put  in 
such  a  case,  are  very  clearly  set  jeopardy,  and  neither  they  nor  the 
forth  by  Davis,  P.  J. ,  as  follows,  funds  being  amenable  to  the  juris- 
p.  175:  "The  whole  scope  and  diction  of  the  state  under  whose 
story  of  this  action  may  be  stated  laws  the  corporation  was  created 


2U 


RECEIVERS. 


[chap. 


X. 


§  307.  It  is  also  held,  under  the  code  of  procedure  in 
New  York,  upon  proceedings  by  the  attorney-general  in  the 
nature  of  a  quo  warranto,  for  the  dissolution  of  a  corpora- 
tion and  the  forfeiture  of  its  franchises,  that  the  court  has 
no  power  to  appoint  a  receiver  before  judgment  of  forfeit- 


and  exists,  refuse  to  make  applica- 
tion of  such  funds  to  the  creditors 
and  stockholders  in  conformity  to 
the  proceedings  for  dissolution,  or 
to  put  the  same  in  a  place  of  safety. 
They  possess,  being  all  the  execu- 
tive and  a  majority  of  the  admin- 
istrative officers  of  the  corporation, 
such  power  of  control,  that  no  suit 
can  lie  commenced  by  the  corpora- 
tion itself  to  protect  the  fund.  Is 
a  court  of  equity  of  the  state  pow- 
erless, at  the  suit  of  a  minority  of 
the  officers  who  are  stockholders 
and  personally  interested  in  the  ap- 
plication and  distribution  of  the 
fund,  to  appoint  a  receivership  of 
the  particular  fund,  and  apply  it, 
first,  to  the  creditors  of  the  corpo- 
ration, and  secondly,  to  the  stock- 
holders, in  accordance  with  the 
proceedings  for  dissolution  in  the 
home  state  of  the  corporation?  We 
have  clearly  jurisdiction  of  the 
persons  of  the  officers  in  the  state. 
We  have  jurisdiction  of  the  prop- 
erty because  it  is  within  our  terri- 
tory. The  plaintiffs  are  also  citizens 
of  our  state  and  show  themselves 
to  be  remediless  both  in  Connecti- 
cut and  in  the  federal  courts.  We 
are  not  prepared  to  say,  until  some 
higher  tribunal  shall  admonish  us 
to  the  contrary,  that  this  court  has 
not,  under  such  circumstances, 
power  to  intervene,  so  far  as  relates 
to  the  property  actually  within  the 
state.  The  court  is  not  powerless, 
in  such  a  case,  to  enforce  any  judg- 
ment it  may  render,  so  long  as  it  is 


limited  to  the  particular  fund  which 
it  finds  here  and  takes  from  the 
hands  of  persons  over  whom  its 
jurisdiction  is  convt".lete  and  puts  it 
into  the  safe-keeping  of  its  own 
officers;  and  we  are  aware  of  no 
authority  which  denies  to  us  juris- 
diction in  a  case  containing  all  the 
elements  of  that  'before  us.  It  is 
idle  to  answer  that  the  courts  of 
Connecticut  have  jurisdiction  over 
the  corporation ;  for  such  jurisdic- 
tion, so  far  as  it  affects  the  ques- 
tions and  remedies  here,  is  futile. 
Its  impotency  was  illustrated  in  the 
proceeding  commenced  in  the  supe- 
rior court  of  that  state  in  which 
Eaton  was  appointed  receiver,  and 
in  which  he  was  forced,  in  sub- 
stance, to  report  that  all  the  assets 
of  the  corporation  were  detained 
in  the  city  of  New  York,  and  that 
'  he  never  has  had ,  nor  permitted 
to  have,  possession  of  any  of  the 
assets  of  the  said  corporation.'  A 
receiver,  if  appointed  there,  must 
resoi-t  to  our  courts  to  reach  the 
appellants  and  the  fund  in  their 
hands,  by  an  action  similar  to  the 
present,  and  become  substantially 
the  receiver  of  this  court,  in  order 
to  acquire  possession  of  the  fund. 
But  while  no  such  officer  exists  in 
Connecticut,  there  seems  to  us  no 
sound  reason  why  the  jurisdiction 
of  this  court  may  not  be  invoked 
to  preserve  a  fund  now  in  the 
hands  of  persons  in  our  jurisdic- 
tion and  in  danger  of  being  lost  by 
their  insolvency  or  improper  use."' 


CHAP.  X.]  CORPORATIONS.  --i3 

ure,  although  an  injunction  may  properly  issue  to  prevent 
the  corporation  from  doing  any  illegal  act,  or  from  dispos- 
ing of  its  funds.1 

§  SOS.  In  the  case  of  a  corporation  transacting  a  large 
business  and  where  large  interests  are  involved,  upon  appli- 
cation for  a  receiver  in  behalf  of  a  judgment  creditor  seek- 
ing the  enforcement  of  his  judgment  against  the  corporation, 
the  court  may  give  the  defendant  an  opportunity  of  pre- 
venting the  interference  of  a  receiver  by  giving  security  in 
lieu  thereof.  And  for  this  purpose,  a  reasonable  time  may 
be  allowed  the  defendant  corporation,  within  which  to  file 
a  bond  with  sufficient  sureties,  to  secure  the  plaintiff  in  any 
recovery  which  may  be  had  in  his  action.2  And  although 
the  facts  may  not  warrant  a  receiver  in  behalf  of  mortgage 
bondholders  of  a  corporation,  as  of  a  canal  company,  the 
court  may  yet  retain  the  cause  for  the  purpose  of  requiring 
the  company  to  render  accounts  from  time  to  time  of  its 
receipts  and  disbursements,  for  the  information  and  protec- 
tion of  such  bondholders.3 

§  309.  When  an  action  has  been  instituted  by  a  corpora- 
tion against  one  of  its  shareholders,  to  recover  <the  amount 
of  his  unpaid  subscription  to  the  capital  stock  of  the  com- 
pany, it  constitutes  no  defense  to  such  action,  that  a  receiver 
is  afterward  appointed  over  the  corporation,  and  the  action 
will  not  be  defeated  because  of  such  appointment;  espe- 
cially when  the  receiver  has  taken  no  steps  to  possess  himself 
of  the  cause  of  action,  or  to  collect  the  amount  due  from 
defendant.4 

§  310.  Where  certain  shares  of  stock  in  an  incorporated 
company  are  in  the  hands  of  its  receiver,  the  certificates 
having  been  duly  issued  to  him,  and  the  certificates  arc 
entitled  to  be  registered  by  the  registering  agent  of  the 

'People  v.  Washington  Ice  Co.,  3  Stewart  v.  Chesapeake  &  Ohio 
18  Ab.  Pr.,  382.  Canal  Co.,  5  Fed.  Rep.,  149;  S.  C, 

2  Barclay  v.  Quicksilver  Mining    4  Hughes,  47. 
Co.,  9  Ab.  Pr.,  N.  S.,  283.  *  Glenville  Woolen  Co.  v.  Ripley, 

43  N.  Y.,  206. 


246 


RECEIVERS. 


[CHAP.  X. 


company,  and  to  be  certified  as  representing  shares  duly 
registered,  such  registration  being  a  valuable  privilege  ap- 
purtenant to  the  shares,  one  who  prevents  them  from  being 
so  registered,  and  who  converts  the  privilege  to  his  own  use, 
by  procuring  it  to  be  conferred  upon  an  equal  number  of 
shares  of  his  own  stock,  may  be  compelled  by  the  court  to 
make  good  the  stock  in  the  hands  of  the  receiver  by  restor- 
ing such  privilege.1 

§  311.  It  has  been  held  in  England,  in  a  case  where  the 
defendant,  holding  a  fellowship  in  a  college  corporation,  had 
assigned  the  profits  thereof  to  the  plaintiff,  that  the  latter 
could  not  have  a  receiver  of  the  dividends  and  moneys  due 
from  such  fellowship.2 

§  312.  The  principles  governing  courts  of  equity  in  the 
selection  of  receivers  over  corporations  are  sufficiently 
treated  elsewhere  in  this  volume.3  It  may  be  here  observed, 
however,  that  the  receiver  of  a  corporation  need  not  neces- 
sarily be  an  individual  person,  and  a  corporate  body  may 
itself  be  appointed  receiver  of  another  corporation  upon  the 
insolvency  of  the  latter.4 

§  312  a.  "When  a  receiver  is  appointed  over  a  corpora- 
tion, with  the  usual  powers  of  receivers,  and  specially  em- 
powered by  the  order  of  the  court  to  receive  all  the  effects 
and  choses  in  action  of  the  corporation,  such  order  involves 
a  correlative  duty  upon  the  part  of  the  corporate  officers  to 
deliver  the  assets  to  the  receiver,  even  though  such  delivery 
is  not  specifically  directed  by  the  court.  A  failure,  there- 
fore, by  the  officers  of  the  corporation  to  deliver  its  assets 
to  the  receiver,  and  their  sale  by  such  officers,  constitute  a 
contempt  of  court  and  will  be  punished  as  such.5 


i  Erie  R.  Co.  v.  Heath,  8  Blatchf., 
536. 

-Berkeley  v.  Kings  College,  10 
Beav.,  602. 

3  See  chapter  III,  ante. 

4  In  re  Knickerbocker  Bank,  19 
Barb.,  602.     And  see  as  to  consid- 


erations governing  the  court  in 
selecting  a  receiver  of  a  large  bank- 
ing corporation,  whose  assets  are 
of  great  value,  In  re  Empire  City 
Bank,  10  How.  Pr.,  498. 

&  Young    v.    Rollins,  90    N.  C, 
125. 


CHAP.  X.]  CORPORATIONS.  24:7 


II.  Functions  Duties  and  Rights  of  Action  of  the 
Receiver. 

§  313.     Want  of  harmony  in  the  decisions. 

314.  Receiver  of  insolvent  corporation  a  trustee  for  creditors  and 

shareholders. 

315.  Receiver  represents  the  corporation,  for  purposes  of  litigation. 
315a.  May  purchase  at  mortgage  sale;  may  prosecute  or  defend  suits. 

316.  Succeeds  to  all  rights  of  action  of  the  corporation ;  trover  for 

conversion  of  note ;  suit  on  note  for  policy  of  insurance ;  suit 
for  money  due,  or  improperly  disposed  of. 

317.  Rights  of  action  of  receiver  of  insolvent  bank. 

317  a.  Right  to  enforce  individual  or  additional  liability  of  stockholders. 

318.  Appointment  does  not  change  rights  of  action  or  contract  rela- 

tions; same  defenses  allowed;  mutual  insurance  company; 
change  of  corporate  name. 

319.  Receiver  can  not  disaffirm  settlement  made  by  corporation;  can 

not  sue  on  canceled  note  of  insurance  company. 

320.  May  disaffirm  act  of  corporation  in  fraud  of  creditors ;  illegal 

transfer  of  securities ;  fraudulent  disposal  of  money  and  notes; 
illegal  mortgage ;  fraudulent  transfers. 

321.  Right  of  action  to  recover  illegal  dividends  declared  by  insolvent 

corporation. 

322.  When  powers  derived  wholly  from  statute. 

323.  Presumption  as  to  receiver's  right  to  divide  assets  among  cred- 

itors. 

324.  Receiver's  right  of  action  to  recover  of  shareholders  unpaid  sub- 

scriptions to  capital  stock. 
324  a.  Defenses  to  such  actions :  transfer  of  shares. 

325.  Shareholder  can  not  enjoin  receiver  from  collecting  unpaid  sub- 

scription;  defense  of  fraud  not  admissible  when  all  parties 
participated. 

326.  Receivers  of  mutual  insurance  companies  may  recover  assess- 

ments due  on  premium  notes. 

327.  What  receiver  must  allege  to  maintain  this  class  of  actions. 

328.  Liability  of  makers  of  premium  notes  not  increased  by  appoint- 

ment of  receiver ;  assessment  must  be  alleged  and  proven. 

329.  Receiver  takes  place  of  directors  in  making  assessment,  subject 

to  sanction  of  court. 

330.  Acts  in  a  ministerial  and  not  a  judicial  capacity;  may  re-assess 

for  unpaid  balances. 

331.  When  may  assess  all  notes ;  what  proof  required  as  to  losses. 

332.  Receiver  may  allow  equitable  claims  for  losses. 


24S  RECEIVERS.  [CHAT.  X. 

§  333.     Principles  governing  set-offs  in  actions  by  receivers  of  corpora- 
tions. 

334.  Discretion  as  to  compromising  demands  against  the  corporation ; 

may  decline  to  ratify  contract ;  can  not  waive  express  stipula- 
tions of  insurance  policy. 

335.  Limited  to  allowance  of  claims  recoverable  against  the  corpora- 

tion. 

336.  Court  may  authorize  receiver  to  compromise  doubtful  claims ; 

receiver  may  allow  salaries  of  officers  pro  rata. 

337.  Receiver  may  exercise  option  of  company  as  to  deposit  of  collat- 

erals. 

338.  May  assign  chose  in  action ;  sale  not  set  aside  because  applied  for 

by  creditor  who  was  also  a  judge  of  the  court. 

339.  When  defendant  entitled  to  costs  out  of  fund  in  receiver's  hands. 

340.  Judgment  against  receiver  for  taxes,  enforced  only  against  funds 

in  his  hands  as  receiver. 

341.  Enforcement  of  demand  by  receiver  against  debtor,  not  a  taking 

under  legal  process. 

342.  Receiver  should  not  himself  apply  money  in  payment  of  judg- 

ments ;  distribution  made  by  court. 

§  313.  It  has  already  been  shown,  that  in  most  of  the 
states  of  this  country,  the  general  jurisdiction  of  courts  of 
equity  over  corporations  has  been  enlarged,  to  the  extent  of 
authorizing  the  appointment  of  receivers  in  behalf  of  cred- 
itors and  shareholders.  The  general  purpose  of  these  legis- 
lative enactments  has  been  to  provide  adequate  protection, 
in  case  of  insolvency  of  the  corporate  body  or  of  misconduct 
on  the  part  of  its  officers,  to  those  who  might  otherwise  be 
without  remedy  in  the  usual  course  of  proceedings  at  law. 
The  question  of  the  status  or  relation  occupied  by  receivers 
thus  appointed,  and  of  their  duties  and  functions,  is  one  of 
much  importance;  and  while  a  want  of  harmony  is  some- 
times apparent  in  the  decisions  upon  these  points,  it  is 
believed  that  they  are  generally  susceptible  of  being  harmon- 
ized, and  that  they  are  not  inconsistent  with  the  established 
principles  of  equity. 

§  314.  As  regards  the  relation  occupied  by  the  receiver 
of  an  insolvent  corporation  towards  the  parties  in  interest, 
the  better  doctrine  undoubtedly  is  that  he  stands  as  the  rep- 
resentative, both  of  the  creditors  of  the  corporation  and  of 


CHAT.  X.]  C0KP0KATI0NS.  249 

its  shareholders.  lie  is  not,  therefore,  the  agent  or  repre- 
sentative of  the  corporation  exclusively,  but  is  to  be  regarded 
rather  as  a  trustee  for  both  creditors  and  shareholders.1 
Thus,  under  the  laws  of  Xew  York  authorizing  the  appoint- 
ment of  a  receiver  of  the  effects  of  a  corporation,  upon  the 
application  of  a  judgment  creditor  after  return  of  execution 
unsatisfied,  it  is  held  that  the  receiver,  by  virtue  of  his  ap- 
pointment, becomes  a  trustee,  not  only  for  the  creditor 
on  whose  application  he  was  appointed,  but  for  all  other 
creditors  of  the  corporation,  and  also  a  trustee  for  the  share- 
holders, in  which  capacity  he  is  as  much  bound  to  guard  and 
subserve  their  interests  as  those  of  the  creditors.2 

§  315.  "While  the  receiver  of  an  insolvent  corporation  is 
thus  treated  as  the  representative  of  both  creditors  and 
shareholders,  as  far  as  any  beneficial  interest  is  concerned, 
yet,  for  the  purposes  of  determining  the  nature  and  extent 
of  his  title,  he  is  regarded  as  representing  only  the  corpo- 
rate body  itself,  and  not  its  creditors  or  shareholders,  being 
vested  by  law  with  the  estate  of  the  corporation,  and  de- 
riving his  own  title  under  and  through  it.  For  purposes  of 
litigation,  therefore,  he  takes  only  the  rights  of  the  corpo- 
ration, such  as  could  be  asserted  in  its  own  name,  and  upon 
that  basis  only  can  he  litigate  for  the  benefit  of  either  share- 

iGillet  v.  Moody,  3  N.  Y.,479;  2Libby  v.  Rosekrans,  55  Barb., 
Talmage  v.  Pell,  7  N.  Y.,  347 ;  Libby  217,  220.  But  see  Atchison  v.  Da- 
v.  Rosekrans,  55  Barb.,  217;  Alex-  vidson,  2  Pin.  (Wis.),  48,  where  it  is 
ander  v.  Relfe,  74  Mo.,  495.  But  held  that  receivers  of  corporations 
see  Atchison  v.  Davidson,  2  Pin.  are  appointed  for  the  benefit  of 
(Wis.),  48.  See,  as  to  functions  and  creditors,  with  power  and  author- 
powers  of  a  receiver  of  a  moneyed  ity  to  collect  and  pay  over  to  them 
corporation  under  the  statutes  of  the  assets.  The  choses  in  action  of 
New  York,  appointed  in  behalf  of  a  the  corporation,  it  is  hold,  are  in 
judgment  creditor,  after  execution  the  possession  of  the  receivers  for 
returned  unsatisfied,  Angell  v.  Sils-  the  creditors,  and  are  to  all  intents 
bury,  19  How.  Pr.,  48.  And  see,  as  and  purposes  the  property  of  the 
to  functions  of  a  receiver  over  an  creditors,  the  receivers  holding  the 
insolvent  banking  corporation,  un-  property  and  assets  of  the  corpora- 
der  the  laws  of  Ohio.LafayetteBank  tion  in  trust  for  the  creditors,  as 
v.  Buckingham,  12  Ohio  St.,  419;  the  agents  of  the  court. 
State  v.  Claypool,  13  Ohio  St.,  14. 


250 


EECEIVEES. 


[chap. 


holders  or  creditors,  except  when  acts  have  been  done  in 
fraud  of  the  rights  of  the  latter,  but  which  are  valid  as 
against  the  corporation  itself,  in  which  case  he  holds  ad- 
versely to  the  corporation.1  And  as  regards  the  nature  of 
the  defense  which  he  may  interpose  in  an  action  brought 
against  him  in  his  official  capacity,  it  would  seem  that  he 
stands  in  no  better  position  than  the  corporation  would  have 
done,  and  is  to  this  extent  its  representative.  Thus,  when 
the  laws  of  the  state  prohibit  a  corporation  from  interposing 


1  Curtis  v.  Leavitt,  15  N.  Y.,  44; 
Alexander  v.  Eelfe,  74  Mo.,  495. 
The  doctrine  of  the  text  is  well 
stated  by  Mr.  Justice  Comstock,  in 
Curtis  v.  Leavitt,  15  N.  Y.,  44,  as 
follows:  "The  appellant,  as  re- 
ceiver (of  an  insolvent  banking  cor- 
poration), has  no  interest  in  or 
power  over  the  property  affected 
by  the  trusts  in  question,  except 
such  as  he  derives  under  the  stat- 
utes which  have  been  mentioned. 
It  has  been  said  in  this,  as  in  other 
cases,  that  he  represents  the  credit- 
ors and  the  stockholders,  but  for 
aU  the  purposes  of  inquiring  into 
this  title,  he  really  represents 
the  corporation.  He  is  by  law 
vested  with  the  estate  of  the  cor- 
porate body,  and  takes  his  title 
under  and  through  it.  It  is  true, 
indeed,  that  he  is  declared  to  be  a 
trustee  for  creditors  and  stockhold- 
ers ;  but  this  only  proves  that  they 
are  the  beneficiaries  of  the  funds 
in  his  hands,  without  indicating 
the  sources  of  his  title  or  the  extent 
of  his  powers.  If,  then,  in  a  con- 
troversy between  the  receiver  and 
third  parties,  in  respect  to  the  cor- 
porate estate,  it  is  possible  to  form 
a  conception  of  rights,  legal  or 
equitable,  belonging  to  the  share- 
holders as  individuals,  which  the 
corporation  itself  could  not  assert 


in  its  own  name,  the  receiver  does 
not  represent  those  rights.  So  far 
as  shareholders  are  concerned,  he 
can  litigate  respecting  the  fund 
upon  precisely  the  grounds  which 
would  be  available  to  the  corpora- 
tion, if  it  were  still  in  existence, 
solvent,  and  no  receivership  had 
been  constituted.  In  regard  to 
creditors,  I  should  certainly  incline 
to  take  the  same  view  of  his  rights 
and  powers  under  the  statutes  re- 
ferred to.  It  has,  however,  been 
uniformly  assumed,  and  was  not 
denied  on  the  argument,  that  he 
succeeds  to  the  rights  of  creditors, 
and  takes  his  title  under  them, 
where  conveyances  have  been 
made  in  fraud  of  then  rights,  but 
otherwise  valid.  In  such  cases,  he 
held  adversely  to  the  debtor  corpo- 
ration. For  all  the  purposes  of  the 
present  controversy,  I  shall  proceed 
upon  this  assumption.  In  general, 
then,  a  receiver  of  this  description 
takes  merely  the  rights  of  the  cor- 
poration, such  as  could  be  asserted 
in  its  own  name,  and  on  that  basis 
only  can  he  litigate  for  the  benefit 
of  either  stockholders  or  creditors, 
except  when  acts  have  been  done 
in  fraud  of  the  rights  of  the  latter, 
but  valid  as  to  the  corporation 
itself." 


CHAP.  X.J  C0KPORATIONS.  251 

the  defense  of  usury  to  any  action  brought  against  it,  it 
would  seem  that  the  receiver  is  affected  by  the  prohibition 
to  the  same  extent  as  the  corporation  itself  would  have 
been.1 

§  315  a.  Since  the  receiver  succeeds  to  the  title  and 
rights  of  action  of  the  corporation  itself,  he  may  purchase 
property  at  a  mortgage  sale  in  satisfaction  of  a  debt  due  to 
the  corporation,  having  the  same  powers  in  this  regard  that 
the  corporation  might  have  exercised.2  And  a  receiver  ap- 
pointed over  a  corporation,  under  the  statutes  of  North 
Carolina,  for  the  purpose  of  winding  up  its  affairs,  may 
prosecute  an  action  to  recover  its  property  after  the  corpo- 
ration has  ceased  to  exist  by  reason  of  the  expiration  of  its 
charter.*  So  a  receiver  of  an  insolvent  insurance  company, 
under  the  laws  of  Pennsylvania,  being  empowered  by  stat- 
ute to  defend  suits  in  the  name  of  the  corporation  or  other- 
wise, and  to  do  all  other  acts  necessary  to  the  settlement  of 
its  affairs,  may  be  substituted  in  an  action  of  attachment 
which  had  been  begun  against  the  corporation  prior  to  his 
appointment.4  But,  under  the  New  York  code  of  procedure, 
when  a  receiver  of  a  corporation  has  brought  an  action 
against  its  directors  to  recover  for  their  neglect  of  dut}r,  the 
stockholders  have  no  such  ownership  of,  or  interest  in,  the 
cause  of  action  as  to  entitle  them  to  be  admitted  as  a  matter 
of  right  as  parties  plaintiff  with  the  receiver.5 

§  316.  As  regards  the  rights  of  action  vested  in  the  re- 
ceiver of  a  corporation  by  virtue  of  his  appointment,  the 
general  rule  is  that  he  takes  all  rights  of  action  which  the 
corporation  itself  originally  had,  and  may  enforce  them 
by  the  same  legal  remedies.6    He  may,  therefore,  maintain 

i  Curtis  v.  Leavitt,  15  N.  Y.,  85,  6p,rouwer  v.  Hill,  1  Sandf.,  629; 

86,  per  Comstock,  J.  White  v.  Haiglit,  16  N.  Y.,  310 ;  Os- 

2  Jacobs  v.  Turpin,  83  111.,  424.  good  v.  Laytiii,  48  Barb.,  4G4.    And 

3  Asheville  Division  No.  15  v.  As-  see  Shaughnessy  v.  The  Rensselear 
ton,  92  N.  C,  578.  Insurance  Co., 21  Barb., 605;  Stark  r. 

4  Pickersgill  v.  Myers,  99  Pa.  St.,  Burke,  5  La.  An.,  740 ;  New  Orleans 
602.  Gas  Light  Co.   v.  Bennett,  6  La. 

s  Kimball  v.  Ives,  30  Hun,  568.         An. ,  457 ;  Gas  Light,&  Banking  Co. 


252 


KECEIVERS. 


[chap.  X. 


an  action  of  trover  to  recover  the  value  of  a  promissory 
note  clue  to  the  corporation  and  converted  by  defendant, 
the  right  of  action  accruing  before  his  appointment.1  So 
he  may  maintain  an  action  of  trover  for  the  wrongful  con- 
version of  property  of  the  corporation.2  And  the  receiver 
of  an  insolvent  corporation  is  entitled  to  enforce  all  the 
securities  belonging  to  the  corporation  for  the  purpose  of 
paying  its  debts.  A  receiver  of  an  insolvent  insurance  com- 
pany may,  therefore,  maintain  an  action  to  collect  a  note 
given  for  a  policy  of  insurance  by  the  assured.3  And  in 
New  York,  receivers  of  insolvent  corporations  are  held  to  be 
fully  authorized,  both  by  statute  and  by  virtue  of  their  gen- 
eral powers,  to  sne  for  all  money  due  to  the  corporation, 
and  for  all  property  improperly  disposed  of  in  violation  of 
either  the  rights  of  creditors  or  of  shareholders,  for  the  pur- 
pose of  paying  the  debts  of  the  corporation,  and  dividing 
the  surplus,  if  any,  among  the  shareholders.4 

§  317.  The  same  general  doctrine  prevails  in  Rhode 
Island,  where  it  is  held  that  the  receiver  of  an  insolvent 
banking  corporation,  appointed  under  a  statute  authorizing 
the  proceeding,  is  clothed  with  all  the  powers  and  rights  of 
the  corporation  itself,  with  respect  to  the  collection  of 
its  debts  and  the  enforcement  of  obligations  in  its  favor. 
His  principal  duty  being  to  protect  the  creditors  of  the 
bank,  he  may  take  advantage  of  any  fraud  in  derogation  of 
the  rights  of  creditors  to  which  the  insolvent  corporation 
was  a  party,  and  may  maintain  an  action  to  recover  money 
of  which  the  corporation  has  been  defrauded.  "Where,  there- 
fore, an  officer  of  the  bank,  in  breach  of  his  trust,  has 
wrongfully  appropriated  funds  of  the  bank  to  his  own  use, 
the  receiver  may  maintain  an  action  for  money  had  and  re- 


r.  Haynes,  7  La.  An.,  114;  Hyde  v. 
Lynde,  4  N.  Y.,  387. 

"iBrouwer  v.  Hill,  1  Sandf.,  629. 
y, 2  Terry  v.  Bamberger,  14  Blatchf., 
234. 

s  White  v.  Haight,  16  N.  Y.,  310. 

4  Osgood  v.  Lay  tin,  48  Barb.,  464. 


And  see,  as  to  right  of  action  of  the 
receiver  of  an  insolvent  insurance 
company  under  the  laws  of  New 
York,  upon  premium  notes  due  the 
company,  Lawrence  v.  McCready, 
6  Bosw.,  329;  Berry  v.  Brett,  id., 
627. 


CHAP.  X.]  CORPORATIONS. 


253 


ceived  against  such  officer.  And  in  such  action,  it  is  not 
necessary  that  the  receiver,  as  a  condition  precedent  to  his 
recovery,  should  prove  a  special  injury  resulting  from  the 
wrong  complained  of  to  some  creditor  or  shareholder  of  the 
bank.  ISTor  need  the  receiver,  in  order  to  entitle  him  to  a 
recovery,  tender  to  the  defendant  his  shares  of  capital  stock 
in  the  bank,  which  he  had  parted  with  in  consideration  of 
the   securities  for  the  conversion  of  which  the   action  is 


brought.1 


§  317  a.     The  authorities  are  not  wholly  reconcilable  as 
to  the  right  of  a  receiver  of  a  corporation  to  maintain  an 
action  in  behalf  of  its  creditors,  to  recover  of  shareholders 
an  individual  or  additional  liability,  imposed  by  charter  or 
statute  upon  shareholders  for  the  protection  of  creditors. 
Regarding  the  receiver  as  limited  to  such  rights  of  action 
as   might  have  been  enforced  by  the   corporation  itself, 
under  a  bank  charter  making  stockholders  liable  for  double 
the  amount  of  their  stock,  it  has  been  held  that  a  receiver 
of  the  bank  could  not  enforce  such  liability,  since  it  is  con- 
strued to  exist  in  favor  of  the  creditors  and  not  of  the  corpo- 
ration.2   So  when  stockholders  are  made  liable  by  statute  to 
the  creditors  of  the  corporation,  to  an  amount  equal  to  their 
stock,  for   all  debts   and  contracts  made  until  the  whole 
amount  of  capital  stock  is  paid  in,  the  liability  being  re- 
garded as  neither  in  favor  of  the  corporation  itself,  nor  of 
all  its  creditors,  but  only  for  the  benefit  of  such  creditors 
as  fall  within  the  prescribed  conditions,  the  receiver  can  not 
maintain  an  action  to  enforce  such  liability.3     And  when  by 
the  charter  of  a  bank,  its  shareholders  are  made  severally 
and  individually  liable,  to  the  amount  of  their  stock,  to  de- 
positors, the  right  of  action  is  construed  as  being  conferred 
directly  upon  the  depositors,  and  it  can  not,  therefore,  be 
enforced  by  the  receiver.4     But  under  a  statute  making  all 
persons  composing  the  corporation  liable  to  the  extent  of 

iHaye3  v.  Kenyon,  7  R.  L,  136.        'Farnsworth  v.  Wood,  91  N.  Y., 
zjaoobson  v.  Allen,  20  Blatchf.,    808. 
525.  4  Wincock  v.  Turpin,  96  111.,  135. 


254. 


RECEIVERS. 


[chap.  X. 


their  respective  shares  of  stock,  for  all  debts  due  at  the  time 
of  the  dissolution  of  the  corporation,  a  receiver  appointed 
in  an  action  brought  in  behalf  of  all  creditors  to  wind  up 
the  corporation,  may  enforce  such  liability  against  the 
shareholders.1  And  when  the  additional  stock  liability  is 
created  by  charter  in  favor  of  a  certain  class  of  creditors 
as  an  entirety,  an  action  may  be  maintained  by  some  of 
such  creditors  in  behalf  of  all,  the  receiver  proceeding  con- 
currently with  them  by  petition  in  the  same  proceeding,  to 
enforce  such  stock  liability  in  equity  for  the  benefit  of  the 
entire  body  of  creditors  interested  therein.  And  in  such 
action,  the  court  may  enjoin  individual  creditors  from  pur- 
suing their  separate  actions  at  law  to  enforce  such  liability 
for  their  own  benefit.2 

§  318.  It  follows  necessarily  from  the  principles  already 
discussed  and  illustrated,  that  the  appointment  of  a  receiver 
over  a  corporation  does  not  have  the  effect  of  changing  any 
rights  of  action,  or  of  changing  the  contract  relations  existing 
between  the  corporation  and  its  debtors.3  No  question  of 
right,  as  between  these  parties,  being  affected  by  the  ap- 
pointment, any  defense  which  the  debtor  might  have  urged 
in  an  action  brought  against  him  by  the  corporation  itself, 
may  still  be  made  in  an  action  brought  against  him  by  the 
receiver.4    And  in  the  case  of  a  mutual  insurance  company, 


1  Story  v.  Furman,  25  N.  Y.,  214. 
See,  also,  McDonald  v.  Ross-Lewin, 
29  Hun,  87. 

2Eames  v.  Doris,  102  111.,  350. 

3  Williams  v.  Babcock,  25  Barb., 
109;  Bell  v.  Shibley,  33  Barb.,  610. 
And  see  Shaughnessy  v.  The  Rens- 
selaer Insurance  Co.,  21  Barb.,  605; 
Savage  v.  Medbury,  19  N.  Y.,  32. 

4Moise  v.  Chapman,  24  Ga.,  249; 
Devendorf  v.  Beardsley,  23  Barb., 
656.  In  the  latter  case,  Mr.  Justice 
James  observes,  p.  659,  as  follows : 
"The  plaintiff,  as  receiver  of  the 
American  Mutual  Insurance  Com- 


pany, takes  its  notes  and  assets 
subject  to  all  the  conditions  and 
legal  disabilities  with  which  they 
were  trammeled  in  the  hands  of 
the  corporation  itself ;  he  can  not 
impeach  or  disaffirm  its  author- 
ized acts,  nor  the  authorized  acts 
of  its  agents.  If  a  note  in  the 
hands  of  the  corporation  was  void, 
or  incapable  of  enforcement,  by 
reason  of  fraud  or  illegality  in  its 
procurement  or  inception,  passing 
it  into  the  hands  of  a  receiver  does 
not  purge  it  of  these  defects." 


CHAP.  X.]  CORPORATIONS.  255 

where  the  obligation  of  the  assured  upon  a  premium  note 
given  for  a  policy  of  insurance  depends  upon  an  assessment 
and  notice  thereof,  which  assessment  and  notice  have  never 
been  given  by  the  company,  so  that  it  could  maintain  no 
action  against  the  maker  of  the  note,  a  receiver  of  the  com- 
pany stands  in  the  same  situation,  and  will  not  be  allowed 
to  maintain  an  action,  without  having  taken  the  necessary 
steps  to  fix  the  liability  of  the  defendant.1  And  when  a 
receiver  of  an  insolvent  corporation  brings  an  action  upon  a 
note  as  part  of  the  corporate  assets,  but  the  note  is  by  its 
terms  made  payable  to  the  order  of  a  differently  named 
corporation,  a  change  of  the  corporate  name  having  been 
effected,  it  is  necessary  for  the  receiver  to  show,  by  proper 
averments,  that  the  note  is  part  of  the  assets  of  the  cor- 
poration over  which  he  has  been  appointed.2  Nor  can  the 
receiver  be  permitted  to  litigate  questions  which  have  al- 
ready been  determined  adversely  to  the  corporation.  He 
can  not,  therefore,  enjoin  the  collection  of  a  tax  assessed 
against  the  corporation  which  has  already  been  determined 
to  be  valid  in  an  action  brought  in  behalf  of  the  corporation, 
the  receiver  being  as  much  concluded  by  such  former  litiga- 
tion as  the  corporation  itself.3  And,  in  an  action  to  enforce 
against  the  receiver,  a  judgment  previously  obtained  against 
the  corporation,  the  receiver  can  not  contest  the  amount  of 
the  indebtedness,  or  reopen  questions  which  were  litigated 
in  the  former  action,  or  interpose  any  defense  to  the  merits 
which  might  then  have  been  interposed.  It  is,  however, 
still  reserved  for  the  court  appointing  the  receiver  to  de- 
termine the  respective  priorities  among  creditors  as  to  pay- 
ment out  of  the  fund  in  the  receiver's  hands.4 

§  319.  Since  the  receiver  of  a  corporation,  as  we  have 
already  seen,  succeeds  to  the  estate  of  and  derives  his  title 
from  the  corporation,  he  is  bound  by  all  its  lawful  and  au- 

i  Williams  v.  Babcock,  25  Barb.,  -Hopkins  v.  Taylor,  87  111.,  436. 

109;  Thomas  v.  Wballon,  31  Barb.,  4  Pringle  v.  Woohvorth,  90  N.  Y., 

172.  502. 

2  Hyatt  v.  McMabon,  25  Barb. ,  457. 


25G 


RECEIVERS. 


[chap.  X. 


thorized  acts  done  before  the  receivership,  and  will  not  be 
allowed  to  disaffirm  or  set  them  aside.  As  to  all  such  mat- 
ters, he  stands  in  precisely  the  same  position  as  the  corpora- 
tion itself  stood  before  his  appointment;  and  he  can  not 
avoid  a  settlement  which  the  corporation  was  duly  author- 
ized to  make,  and  which  was  effected  before  his  appoint- 
ment. Where,  therefore,  an  insurance  company  has  sur- 
rendered and  canceled  a  note  given  for  insurance,  upon  the 
assured  surrendering  his  policy,  and  no  fraud  upon  the  cred- 
itors of  the  company  is  shown,  a  receiver  subsequently  ap- 
pointed will  not  be  allowed  to  maintain  an  action  upon  the 
note,  since  he  can  have  no  greater  rights  for  this  purpose 
than  the  company  itself  had.1 

§  320.  Where,  however,  the  act  of  the  corporation  which 
it  is  sought  to  disaffirm  is  illegal  and  in  violation  of  the 
rights  of  creditors,  a  different  rule  prevails.  And  in  such 
case,  the  receiver,  being  regarded  for  all  beneficial  interests 
connected  with  the  receivership  as  the  representative  of  the 
creditors  and  stockholders,  will  not  be  concluded  by  such 
act.2  Where,  therefore,  the  directors  of  a  corporation  have 
made  an  illegal  transfer  of  certain  securities,  forming  a  part 
of  the  corporate  assets,  to  one  of  the  shareholders  in  ex- 
change for  his  stock,  the  transfer  impairing  the  security  of 
creditors  and  being  void  as  to  them,  a  receiver  of  the  corpo- 
ration subsequently  appointed  may  maintain  an  action  to 
set  aside  such  transfer.  Indeed,  such  an  action  is  regarded 
as  the  most  appropriate  course  on  the  part  of  the  receiver 
to  compel  the  restoration  of  the  securities,  for  the  benefit  of 


'Hyde  v.  Lynde,  4  N.  Y.,  387. 
Bronson,  C.  J.,  observes,  p.  392: 
"  He  (the  receiver)  is  rts  much 
hound  by  a  settlement  which  the 
company  was  authorized  to  make, 
as  was  the  company  itself.  It 
would  be  strange,  indeed,  if  the 
legal  acts  of  a  corporation  did  not 
bind  the  receiver  of  its  effects.  If 
the  rule  were  not  so,  no  one  would 


dare  venture  to  deal  with  a  corpo- 
ration.'' 

-'Gillet  v.  Moody,  3  N.  Y.,  479; 
Tuckerman  v.  Brown,  33  N.  Y., 
297;  Brouwer  v.  Appleby,  1  Sandf., 
158 ;  Brouwer  v.  Hill,  1  Sandf.,  029; 
Attorney-General  v.  Guardian  Mu- 
tual Life  Insurance  Co.,  77  N.  Y., 


CHAP.  X.]  CORPORATIONS.  257 

all  the  creditors.1  So  when,  the  president  of  a  banking  cor- 
poration has  put  into  the  bank  fictitious  notes,  and  has  used 
them  in  lieu  of  the  like  amount  of  money  of  the  bank,  and 
lias  fraudulently  disposed  of  the  money,  a  receiver  of  the 
bank  may  maintain  an  action  against  the  president  for  the 
recover}1-  of  the  money.  And  in  such  case,  the  possession  of 
the  notes  by  the  receiver  will  be  regarded  as  presumptive 
evidence  that  the  money  has  not  been  repaid,  and  as 
cient  cause  of  action  on  his  part.2  So  when  a  banking  cor- 
poration, while  in  a  condition  of  insolvenc}',  acting  through 
its  cashier,  has  made  an  illegal  and  unauthorized  transfer  of 
certain  notes  held  by  the  bank,  to  one  of  its  directors  who 
knew  of  its  insolvency,  a  receiver  subsequently  appointed 
to  wind  up  the  affairs  of  the  bank  may,  as  the  representa- 
tive of  the  creditors,  repudiate  the  transfer  and  maintain 
an  action  to  recover  back  the  value  of  the  notes,  or  the 
amount  realized  on  them  by  the  defendant.  And  in  such 
an  action,  the  defendant  will  not  be  allowed,  by  way  of 
counter-claim,  the  amount  which  he  lias  actually  paid  for  the 
notes,  since  such  defense  arises  out  of  his  own  illegal  con- 
duct.3 So  in  ]STew  York,  a  receiver  of  an  insolvent  corpora- 
tion may  maintain  an  action  to  set  aside  a  mortgage 
executed  by  the  corporation  without  the  assent  of  the  requi- 
site number  of  its  shareholders,  as  required  by  its  charter.4 
So,  too,  he  may  maintain  an  action  to  set  aside  fraudulent 
agreements  and  transfers  of  its  property  made  by  the 
corporation,  being  to  this  extent  regarded  as  the  repre- 
sentative of  creditors.  And  the  court  by  which  the  re- 
ceiver is  appointed,  having  jurisdiction  of  the  proceedings 
for  winding  up  the  corporation,  may,  upon  application  of 
the  receiver,  enjoin  creditors  from  prosecuting  like  actions, 
even  though  begun  prior  to  the  receiver's  appointment.  In 
such  a  case,  the  decree  dissolving  the  corporation  and  ap- 
pointing the  receiver  being  regarded  as  in  the  nature  of 

i  Gillet  v.  Moody,  3  N.  Y.,  479.  »Gillet  v.  Phillips,  18  N.  Y.,  114. 

2  Butterworth  v.  O'Brien,  24  How.  *  Vail  v.  Hamilton,  85  N.  Y. ,  453, 

Pr.,  438.  affirming  S.  C,  20  Hun,  355. 
17 


258  EECEIVEES.  [CHAP.  X. 

a  judgment  for  all  the  creditors,  they  are  subject  to  the 
summary  jurisdiction  of  the  court  in  matters  pertaining  to 
the  administration  of  the  estate.  It  is  proper,  therefore,  to 
enjoin  them  from  proceeding  with  their  actions,  upon  peti- 
tion or  motion  by  the  receiver  in  the  cause  in  which  he  was 
appointed,  without  bringing  a  new  suit  for  this  purpose.1 

§  321.  The  right  of  action  of  a  receiver  of  an  insolvent 
corporation,  to  recover  back  dividends  which  have  been  im- 
properly paid,  may  be  based  upon  the  principles  which  have 
been  discussed  in  the  preceding  section.  And  where  the 
law  of  the  state,  regulating  the  incorporation  of  insurance 
companies,  provides  that  no  dividend  shall  be  made  by  any 
company  incorporated  under  the  act  when  its  capital  stock 
is  impaired,  or  when  the  making  of  such  dividend  will  have 
the  effect  of  impairing  the  capital  stock,  a  dividend  paid  to 
shareholders  of  the  corporation,  while  it  was  in  a  condition 
of  insolvency,  may  be  recovered  back  by  its  receivers.  In 
such  case,  the  shareholders  being  made  liable  by  statute  to 
the  creditors  of  the  corporation  to  the  extent  of  such  illegal 
dividends,  the  action  to  enforce  this  liability  is  properly 
brought  by  the  receivers,  who  are,  to  this  extent  and  for 
this  purpose,  regarded  as  trustees  for  the  benefit  of  all  the 
creditors.2     And  in  such  case,  it  is  the  duty  of  the  court  to 

1  Attorney-General  v.  Guardian  itors  of  the  corporation,  who  were 
Mutual  Life  Insurance  Co.,  77  N.  made  defendants,  from  prosecut- 
Y.,  272.  ing  similar  actions.     The  statute 

2  Osgood  v.  Laytin,  3  Keyes,  521,  under  which  the  company  was  in- 
affirming  S.  C.,  48  Barb.,  464;  Os-  corporated  provided  that  no  divi- 
good  v.  Ogden,  4  Keyes,  70.  But  dend  should  ever  be  made  when 
see,  contra,  Butterworthv.  O'Brien,  the  capital  stock  was  impaired,  or 
24  How.  Pr.,  438,  where  it  was  held  when  the  effect  of  such  dividend 
that  the  right  of  action  to  recover  would  be  to  impair  it,  and  that  any 
such  dividends  was  in  the  creditors  shareholder  receiving  such  a  divi- 
themselves.  Osgood  v.  Laytin,  3  dend  should  be  individually  liable 
Keyes,  521,  in  which  the  doctrine  of  to  the  creditors  of  the  corporation 
the  text  was  very  clearly  enunci-  to  the  extent  of  the  dividend  re- 
ated,  was  an  action  by  receivers  of  an  ceived.  Judgment  for  plaintiffs  on 
insolvent  insurance  company  to  re-  demurrer,  from  which  defendants 
cover  illegal  dividends  paid  to  share-  appealed.  The  court  of  appeals? 
holders,  and.  to  enjoin  certain  cred-  affirmed  the  judgment,  Grover,  J., 


CHAP.  X.'J 


CORPORATIONS. 


250 


protect  the  shareholders  from    being   harassed    by   other 
actions  instituted  for  the  same  purpose  by  individual  credit- 


for  the  court,  holding  as  follows, 
p.  523:  "The  design,  plainly  ex- 
pressed hy  the  language  of  the  sec- 
tion, was  to  prohibit  a  dividend  of 
the  capital  among  the  stockholders, 
but  to  preserve  the  same  intact  as  a 
fund  for  the  payment  of  creditors 
and  the  security  of  dealers.  It  fol- 
lows that  the  dividend  in  the  pres- 
ent case  was  illegal,  and  that  the 
stockholders  receiving  the  same  are 
liable  to  the  creditors  for  the 
amount  by  them  respectively  re- 
ceived. The  next  question  is,  how 
is  this  to  be  recovered  from  the 
stockholders?  Their  liability  is 
to  the  creditors  of  the  company. 
It  is  clear  that  no  one  creditor  of 
the  company  can  maintain  an 
action  against  an  individual  stock- 
holder, for  the  reason  that  the 
liability  created  by  statute  is  to  the 
creditors  generally,  and  not  to  indi- 
vidual creditors,  thus  creating  a 
liability  to  the  creditors  jointly. 
Again,  a  creditor,  if  permitted  in- 
dividually to  sue  the  separate 
stockholders,  might  institute  ac- 
tions against  each,  although  his  de- 
mand amounted  to  far  less  than  the 
aggregate  liability,  and  he  would 
continue  a  creditor  until  he  had 
obtained  satisfaction  of  his  debt, 
and  could  obtain  judgment  in  all 
the  actions.  Again,  in  equity,  this 
liability  inures  to  the  creditors  in 
proportion  to  the  amount  of  their 
debts  respectively.  The  maxim, 
that  equality  among  creditors  is 
equity,  is  applicable  to  the  case.  A 
court  of  law  can  not,  in  a  joint 
action  by  all  the  creditors,  work 
out  this  equity  and  do  justice  be- 


tween the  parties.  This  confers 
jurisdiction  in  equity,  upon  the 
ground  that  there  is  no  adequate 
remedy  at  law.  The  plaintiffs,  as 
receivers,  are  trustees  for  all  the 
creditors,  and  the  appropriate 
parties  to  prosecute  in  their  behalf, 
thus  avoiding  the  troublesome  in- 
quiry as  to  who  are  creditors  in  the 
proceeding  to  collect  from  the 
stockholders  the  several  amounts 
each  is  liable  to  pay.  All  the 
stockholders  who  are  liable  may 
and  should  be  included  as  defend- 
ants in  the  same  action.  There  is 
no  difficulty  in  determining  the 
amount  each  is  to  pay,  upon  the 
trial  of  the  cause ;  and  in  case  the 
whole  amount  of  the  liability  is  not 
required  for  the  payment  of  the 
debts  of  the  company,  the  precise 
amount  each  is  to  pay  can  be  de- 
termined hi  the  action.  This 
course  of  proceeding  is  also  neces- 
sary to  prevent  multiplicity  of 
actions,  as  there  are  several  hun- 
dreds of  stockholders.  The  above 
views  dispose  of  the  case  as  to  the 
stockholders.  The  creditors  insist 
that  they  are  not  proper  parties  to 
the  action  against  the  stockholders, 
and  that,  upon  this  ground,  they 
are  entitled  to  judgment  upon  the 
demurrer.  Equity  having  the 
power  to  enforce  payment  from  the 
stockholders,  and  an  action  having 
been  instituted  in  the  proper  mode 
for  that  purpose,  which,  in  its  re- 
sult, will  place  the  fund  in  the 
possession  of  the  court  for  distri- 
bution among  the  creditors,  it  is 
the  duty  of  the  court  to  protect  the 
stockholders  from  being  harassed 


200 


RECEIVERS. 


[CHAP.  X. 


ors  of  the  corporation,  and  it  may  therefore  enjoin  such 
creditors  from  prosecuting  their  actions.1 

§  322.  Where  receivers  over  corporations  are  appointed 
under  a  statute  which  regulates  their  functions  and  pre- 
scribes their  powers  and  duties,  it  is  held  that  they  derive 
their  powers  wholly  from  the  statute  under  which  they  are 
appointed,  and  have  no  other  authority  than  such  as  is  thus 
conferred.  But  to  warrant  them  in  the  exercise  of  a  power, 
it  need  not  be  expressly  conferred,  and  if  it  can  be  fairly 
implied,  either  from  the  general  scope  and  purpose  of  the 
statute,  or  as  an  incident  to  a  power  expressly  given,  there 
is  sufficient  warrant  for  its  exercise.2 

§  323.  It  is  held  in  Wisconsin,  that  in  a  collateral  action, 
in  the  absence  of  any  proof  as  to  the  authority  of  receivers 
of  a  corporation  to  dispose  of  its  assets,  they  are  fully 
empowered  to  dispose  of  and  divide  them  among  the  cred- 
itors. Where,  therefore,  receivers  of  a  banking  corporation 
transfer  to  a  third  person  a  negotiable  note,  part  of  the 
assets  of  the  bank,  in  payment  and  satisfaction  of  a  demand 
held  by  him  against  the  bank,  in  an  action  upon  such  note, 
the  court  will  indulge  the  presumption  that  the  receivers 
have  properly  discharged  their  duties;  and,  in  the  absence 
of  any  proof  of  fraud,  the  legal  title  to  the  note  will  be 
held  to  have  passed  by  the  action  of  the  receivers  to  the 
assignee,  so  that  he  may  recover  upon  it  against  the  makers.3 

§  324.  Under  the  laws  and  practice  of  many  of  the 
states,  the  right  of  action  to  recover  of  shareholders  the 
amounts  due  upon  their  subscriptions  to  the  capital  stock  of 
a  corporation,  vests  in  the  receiver  appointed  in  behalf  of 
the  creditors,  upon  the  insolvency  of  the  company.     Thus, 


by  other  actions  instituted  to  en- 
force the  same  liability.  This  can 
only  be  done  by  restraining  such 
actions.  To  enable  the  court  ef- 
fectually to  do  this,  those  creditors 
who  have  instituted  such  suits,  and 
those  who  threaten  so  to  do,  are 
proper  parties  to  the  action.     The 


judgment  appealed  from  should  be 
affirmed." 

1  Osgood  v.  Laytin,  3  Keyes,  521. 

2  Runyon  v.  Farmers  &  Mechan- 
ics Bank  of  New  Brunswick,  3 
Green  Ch.,  480. 

3  Atchison  v.  Davidson,  2  Pin. 
(Wis.),  48. 


CHAT.  X.]  CORPORATIONS.  2G1 

in  New  York,  receivers  of  insolvent  corporations  are  vested 
with  this  power,  and  may  maintain  actions  to  recover  of 
delinquent  stockholders  their  unpaid  subscriptions,1  and  to 
enjoin  the  creditors  of  the  corporation  from  proceeding 
with  separate  actions  for  the  recovery  of  their  individual 
demands.2  And  it  was  formerly  held  in  New  York,  that 
such  actions  must  be  instituted  against  the  shareholders 
individually,  and  that  they  can  not  be  maintained  against 
them  collectively;3  but  the  later  doctrine  recognizes  the 
right  of  the  receiver  to  bring  the  action  against  all  share- 
holders collectively,  or  to  sue  them  individually.4  So  in 
Rhode  Island,  receivers  of  mutual  insurance  companies  are 
authorized  by  law  to  make  assessments  upon  the  share- 
holders for  paying  the  indebtedness  of  the  corporation.5 
And  in  Louisiana,  on  the  appointment  of  a  receiver  over  a 
corporation  upon  its  insolvency,  the  right  of  action  against 
delinquent  shareholders  for  arrearages  of  their  subscrip- 
tions to  the  capital  stock,  for  the  purpose  of  paying  the 
debts  of  the  corporation,  is  distinctly  recognized  as  being  in 
the  hands  of  the  receiver  and  not  in  the  corporation  or  its 
individual  members."  And  it  would  seem  that  the  remedy 
of  creditors,  in  this  class  of  cases,  is  to  apply  to  the  court 
for  an  order  on  the  receiver  to  make  calls  upon  the  stock- 
holders for  the  purpose  of  meeting  the  indebtedness  of  the 
corporation.7  So  in  Maryland,  a  receiver  under  a  statute 
for  the  dissolution  of  corporations  may  maintain  an  action 
to  recover  a  balance  due  from  a  shareholder  upon  his  unpaid 
subscription.8     And    the    right  of  the  receiver  to  enforce 

i  Pentz  v.  Hawley,  1  Barb.  Ch.,  STobey  v.  Russell,  9  R.  I.,  58. 
122;  Farmers    &  Mechanics    Bank  6 Stark  v.  Burke,  5  La.  An.,  740; 
v.  Jenks,  7  Met.,  592;   Calkins  v.  New  Orleans  Gas  Light  Co.  v.  Ben- 
Atkinson,  2  Lans.,  12;  Rankine  v.  nett,  6  La.  An.,  457;  Gas  Light  & 
Elliott,  16  N.  Y.,  377.  Banking  Co.  v.  Haynes,  7  La.  An., 

2  Calkins  v.  Atkinson,    2   Lans.,  114. 

12;  Rankine  v.  Elliott,   16  N.   Y.,  7New  Orleans  Gas  Light  Co.  v. 

377.  Bennett,  6  La.  An.,  457. 

3 Calkins  v.  Atkinson,  2  Lans.,  12.  sStilhnan  v.  Dougherty,  4-1  Md., 

4  Van  Wagenen  v.  Clark,  22  Hun,  380;    Frank  v.   Morrison,  58  Md., 

497.  423. 


2G2 


RECEIVERS. 


[chap.  X. 


such  subscriptions  by  actions  against  the  shareholders  is  also 
recognized  in  Ohio 1  and  in  Iowa.2  But  in  New  York,  a  re- 
ceiver  of  a  corporation  appointed  on  a  creditors'  bill,  and 
vested  with  only  the  ordinary  powers  of  receivers  in  cred- 
itors' suits,  can  not  maintain  a  bill  in  equity  to  enforce  an 
unpaid  balance  due  from  a  shareholder  upon  his  subscrip- 
tion.3 Nor  can  a  receiver  of  an  insolvent  manufacturing 
corporation,  in  New  York,  recover  unpaid  subscriptions 
when  the  corporation  itself  could  not  have  maintained  the 
action.4  But  if  an  action  for  the  recovery  of  unpaid  sub- 
scriptions has  been  brought  by  the  corporation  before  the 
appointment  of  a  receiver,  it  may  be  continued  in  the  name 
of  the  original  plaintiff  for  the  benefit  of  the  receiver.5 

§  32i  a.  No  errors  which  may  have  been  committed  by 
the  court  in  appointing  the  receiver,  or  in  directing  and 
controlling  his  action,  can  avail  in  defense  of  a  suit  by  the 
receiver  to  enforce  unpaid  subscriptions  to  capital  stock; 
nor  do  the  fraudulent  acts  of  the  receiver,  or  of  the  officers 
of  the  corporation,  constitute  a  defense.6  Nor  can  the 
stockholder  defend  such  action  upon  any  ground  which 
questions  the  action  of  the  court  in  appointing  the  receiver 
and  in  ordering  the  assessment,  such  as  fraud  in  procuring 
the  receiver,  or  that  the  corporation  is  not  indebted,  or  that 
the  action  is  prosecuted  to  harass  the  defendant,  and  all 
such  defenses  should  be  interposed  in  the  proceeding  in 
which  the  receiver  is  appointed  and  the  assessment  ordered.7 
To  conclude  a  stockholder  by  a  proceeding  under  the  Illinois 
statute  to  wind  up  an  insolvent  corporation  and  to  recover 
unpaid  subscriptions,  when  a  receiver  appointed  in  such 
proceeding  sues  for  the  subscription,  the  stockholder  should 


i  Clarke  v.  Thomas,  34  Ohio  St., 
4G. 
-  Stewart  v.  Lay,  45  Iowa,  604. 

3  Mann  v.  Pentz,  3  N.  Y.,  415. 

4  Billings  v.   Eobinson,  28  Hun, 
122. 

&  Phoenix   Warehousing   Co.    v. 
Badger,  67  N.  Y.,  294. 


6  Stewart  v.  Lay,  45  Iowa,  604. 
And  see  this  case  for  a  general  dis- 
cussion of  the  defenses  which  may 
and  may  not  be  interposed  in  such 
an  action. 

7Schoonover  v.  Hinckley,  48 
Iowa,  82. 


CHAP.  X.]  CORPORATIONS.  263 

have  been  made  a  party  to  the  original  proceeding,  and  the 
receiver  should  show  his  appointment  by  a  decree  which  is 
conclusive  against  the  defendant.1  But  the  fact  that  the  en- 
tire capital  stock  had  not  been  subscribed  is  no  bar  to  the 
action,  if  the  defendant,  with  knowledge  of  that  fact,  partici- 
pated in  the  affairs  of  the  company  in  a  manner  which  could 
only  be  justified  upon  the  assumption  that  the  subscribers  in- 
tended to  proceed  with  the  capital  stock  only  partially  sub- 
scribed.2 So  in  an  action  by  a  receiver  to  recover  unpaid 
subscriptions  to  capital  stock,  the  fact  that  the  defendant 
acted  as  a  director  of  the  corporation  estops  him  from  de- 
nying its  corporate  existence,  and  from  asserting  that  the 
amount  of  capital  stock  required  to  be  paid  in  full  in  cash 
had  not  been  paid,  and  that  he  subscribed  upon  the  faith  of 
representations  that  it  had  been  fully  paid,  which  represen- 
tations were  false.3  But  when  a  shareholder  transfers 
his  shares  in  good  faith  before  the  appointment  of  the  re- 
ceiver, all  assessments  thereon  having  been  fully  paid  to  the 
time  of  such  transfer,  and  it  not  appearing  that  any  of 
the  present  creditors  of  the  corporation  were  creditors  at 
the  time  of  such  sale,  such  shareholder  is  not  liable  to  the 
receiver  for  the  balance  of  the  subscription.4 

§  325.  Where  a  statute,  authorizing  the  appointment  of 
receivers  to  wind  up  the  affairs  of  insolvent  corporations, 
makes  it  the  receiver's  duty  to  collect  from  the  shareholders 
of  the  corporation  the  sums  remaining  due  on  account  of 
their  unpaid  subscriptions,  and  a  receiver,  in  the  perform- 
ance of  this  duty,  has  obtained  a  decree  against  a  share- 
holder for  the  payment  of  the  balance  due  from  him,  such 
shareholder  is  not  entitled  to  an  injunction  to  restrain  the 

1  Chandler  v.  Brown,  77  111.,  333;  vested  right  in  the  contract  forsub- 

S.  C,  8  Chicago  Legal  News,  123.  scription    of    every    other    stock- 

The  decree  was  also  held  objection-  holder. 

able  in  that  it  assumed  to  confer  2Stillnian  v.  Dougherty,  44  Md., 

upon    the    receiver    discretionary  380. 

[lowers  to  compromise  with  stock-  3  Ruggles  v.  Brock,  6  Hun,  164. 

holders  as  to  payment  of  subscrip-  4  Billings  v.  Robinson,  28  Hun, 

tions,  since  each  stockholder  had  a  122. 


2G4 


RECEIVERS. 


[chap.  X. 


receiver  from  collecting  the  amount  until  all  the  debts  of 
the  corporation  can  be  ascertained,  and  the  amount  due 
from  each  shareholder  be  determined.  Any  equity  which 
such  shareholder  might  rely  upon  as  the  foundation  for  an 
injunction  should  have  been  urged  in  defense  of  the  action 
brought  by  the  receiver,  and  can  not  avail  the  shareholder 
after  a  decree  against  him  in  that  action.1  And  when  a  re- 
ceiver is  appointed  to  close  up  the  affairs  of  an  insolvent  bank- 
ing corporation  for  the  benefit  of  its  creditors,  in  an  action 
brought  by  him  upon  a  note  given  by  a  stockholder  for  his 
subscription  to  the  capital  stock  of  the  bank,  it  constitutes 
no  defense  to  the  action  that  the  note  was  given  without 
consideration,  and  in  aid  of  an  illegal  and  fraudulent  trans- 
action, when  all  the  parties  participated  in  the  fraud.2 

§  326.  Under  the  practice  prevailing  in  the  states  of  New 
York  and  Indiana,  receivers  of  insolvent  mutual  insurance 
companies  are  empowered  to  recover  assessments  due  upon 
premium  notes  held  by  such  companies  for  the  purpose  of 
adjusting  losses  and  settling  the  indebtedness  of  the  corpo- 
rations. In  New  York,  the  power  of  the  receiver  to  thus 
assess  the  premium  notes  is  derived  wholly  from  statute, 
as  will  be  seen  by  an  examination  of  the  authorities  in  that 
state.3  In  Indiana,  however,  it  is  held,  even  in  the  absence 
of  any  statute  conferring  such  authority  upon  the  receiver 
of  a  mutual  insurance  company,  that  he  is  authorized  to  make 
assessments  upon  the  premium  notes  due  to  the  company, 
for  the  purpose  of  meeting  its  obligations.  The  authority 
to  make  the  assessments  is  implied  from  the  necessity  of 
making  them,  since  without  such  power  it  would  not  be 


iPentzv.  Hawley,  1  Barb.  Ch., 
122. 

2  Farmers  &  Mechanics  Bank  v. 
Jenks,  7  Met.,  592. 

sShaughnessy  v.  The  Rensselaer 
Insurance  Co.,  21  Barb.,  605;  Will- 
iams V.  Babcock,  25  Barb.,  109; 
Thomas  v.  Whallon,  31  Barb.,  172; 
Sands    v.    Sweet,    44    Barb.,    108; 


Bangs  v.  Gray,  12  N.  Y.,  477,  re- 
versing S.  C,  15  Barb.,  264;  Sands 
v.  Sanders,  28  'N.  Y.,  416;  Jack- 
son v.  Roberts,  31  N.  Y,  304;  Law- 
rence v.  McCready,  6  Bosw.,  329; 
Berry  v.  Brett,  id.,  627.  See,  also, 
McDonald  v.  Ross-Lewin,  29  Hun, 
87. 


CHAP.  X.J  CORPORATIONS.  2G5 

possible  for  tlie  receiver  to  manage  and  adjust  the  affairs  of 
the  corporation.1  In  both  these  states,  the  receiver  is  re- 
garded, for  the  purpose  of  making  such  assessments,  as 
standing  in  the  position  and  succeeding  to  the  powers  of 
the  directors  of  the  corporation.2  And  the  receiver,  being 
empowered  in  the  state  of  his  appointment  to  institute  and 
defend  all  suits  in  the  name  of  the  corporation,  or  other- 
wise, may  sue  in  another  state  to  recover  assessments  upon 
premium  notes,  no  creditor  in  the  latter  state  having  inter- 
fered to  prevent  the  prosecution  of  the  suit,  or  to  assert  any 
claim  to  its  proceeds.3  But  where  the  statute  authorizing 
the  directors  to  levy  such  assessments  upon  premium  notes, 
limits  the  power  to  cases  where  it  is  necessary  for  the  pay- 
ment of  "  just  claims  on  the  corporation,"  and  it  is  apparent 
that  neither  the  receiver,  nor  the  court  appointing  him  and 
to  which  he  reported  his  action,  and  from  which  he  ob- 
tained an  order  to  make  the  assessment,  has  examined  or 
passed  upon  the  validity  of  the  claims  or  demands  against 
the  corporation  for  which  the  assessment  was  made,  the  re- 
ceiver can  not  maintain  an  action  to  collect  such  assessment 
upon  a  premium  note.4 

§  327.  The  rule  in  Indiana,  as  to  the  pleadings  required 
in  actions  brought  by  receivers  of  insolvent  insurance  com- 
panies to  recover  assessments  upon  premium  notes,  is  that 
all  the  facts  necessary  to  show  a  liability  upon  the  note 
must  be  pleaded  by  the  receiver.  For,  while  the  court  ap- 
pointing him  may  properly  pass  upon  the  question  of  the 
propriety  or  necessity  of  a  receiver,  it  can  not  in  that  pro- 
ceeding settle  the  question  of  the  liability  of  the  maker  of 
a  premium  note  to  pay,  either  in  whole  or  in  part.5     And 

i  Embree  v.  Shideler,  36  Ind.,  423,  4  Embree    v.   Shideler,   36    Ind., 

sustained  in  Tippecanoe  Township  423;  Downs  v.  Hammond,  47  Ind., 

v.  Manlove,  39  Ind.,  249.  131. 

'-'Thomas  v.  Whallon,  31  Barb.,  5 Manlove  v.  Burger,  38  Ind.,  211. 

172;  Embree  v.  Shideler,  36  Ind.,  See,  also,  Embree  v.  Shideler,  36 

423.  Ind.,  423,  sustained  in  Tippecanoe 

3  Lycoming  Insurance  Co.  v.  Township  v.  Manlove,  39  Ind.,  249; 

Wright,  53  Vt.,  526.  Manlove  v.  Naw,  39  Ind.,  289. 


266  EECEIVEKS.  [CHAP.  X. 

the  receiver  must,  therefore,  allege  and  prove  that  the  court 
has  examined  and  determined  the  validity  of  the  demands, 
for  the  payment  of  which  the  assessment  is  made.1  But  it 
is  not  necessary  that  he  should  present  with  his  pleadings  a 
transcript  of  the  decree  of  the  court  by  which  he  was  ap- 
pointed receiver  of  the  company,  and  by  which  the  assess- 
ment was  made  upon  the  premium  notes,  since  the  evidence 
of  his  right  of  action,  though  essential  to  a  recovery,  is  not 
the  foundation  of  the  action,  and  rests  only  in  averment.2 

§  328.  In  New  York,  the  doctrine  is  well  established,  in 
the  class  of  cases  under  consideration,  that  the  liability  of 
the  members  of  mutual  insurance  companies  upon  their 
premium  notes  is  not  increased  by  reason  of  the  insolvency 
of  the  corporation  and  the  appointment  of  a  receiver,  since 
the  receiver  is  merely  substituted  in  place  of  the  directors  of 
the  company,  and  vested  with  their  rights  and  powers  and 
nothing  more.3  The  liability  of  the  makers  of  the  premium 
notes  being  contingent  upon  certain  conditions,  such  as  loss 
by  the  company,  assessment  upon  the  notes  and  notice  to 
the  makers,  such  contingent  or  conditional  liability  is  not 
changed  into  an  absolute  one  by  the  insolvency  of  the  com- 
pany and  appointment  of  a  receiver ;  since  the  courts  can 
not  change  the  terms  of  the  agreement,  nor  make  that  an 
absolute  promise  which  was  before  a  conditional  one.  And 
the  appointment  of  the  receiver  merely  clothes  him  with 
the  power,  under  the  statutes,  of  determining  the  amount  of 
indebtedness  due  upon  the  notes  by  proceeding  to  make 
the  necessary  assessments,  and  by  taking  such  other  steps 
as  are  required  by  law  to  fix  the  liability  of  the  makers  of 
the  notes,  the  appointment  itself  in  no  manner  fixing  such 
liability.4    The  statutes,  therefore,  requiring  an  assessment 

i  Downs  v.  Hammond,  47  Ind.,  Savage  v.  Medbury,  19  N.  Y.,  32. 

131>  And  see  Devendorf  v.  Beardsley,  23 

2Boland  v.  Whitman,  33  Ind.,  64.  Barb.,  656. 

^Shaughnessy  v.  The  Rensselaer  4  Williams  v.  Babcock,  25  Barb., 

Insurance  Co.,  21  Barb.,  605;  Will-  109. 
iaixis  v.   Babcock,   25    Barb.,  109; 


CHAP.  X.]  CORPOKATIONS.  267 

in  order  to  fix  the  liability  of  makers  of  the  premium  notes, 
an  assessment  by  the  receiver  is  an  indispensable  condition 
to  his  right  of  action.1  And  such  an  assessment  and  ap- 
portionment of  losses  by  the  receiver,  being  a  condition 
precedent  to  his  recovery  upon  the  notes,  must  be  pleaded 
in  the  action  and  proved  upon  the  trial.2  "Where,  therefore, 
the  complaint  of  the  receiver  contained  no  averment  as  to 
the  liabilities  of  the  company,  and  therefore  laid  no  foun- 
dation for  the  introduction  of  evidence  upon  that  point, 
and  there  was  no  proof  of  the  existence  of  any  liabilities  for 
the  payment  of  which  an  assessment  was  necessary,  the 
receiver  was  held  not  entitled  to  recover.3 

§  329.  It  is  also  the  doctrine  of  the  New  York  courts,  in 
this  class  of  cases,  that  the  receiver  takes  the  place  of  the 
directors  in  ascertaining  the  amount  of  demands  against  the 
insurance  company,  and  in  determining  the  necessity  for  an 
assessment,  as  well  as  its  amount,  with  this  limitation  upon 
his  authority,  that  he  can  not  act  without  the  sanction  of 
the  court.  The  court,  however,  does  not  make  the  assess- 
ment, the  receiver  being  himself  the  actor  for  that  purpose, 
and  his  authority  depending,  not  upon  the  order  of  the 
court,  but  upon  the  existence  of  the  facts  rendering  an  as- 
sessment necessary  and  proper.  The  requirement  of  the 
sanction  and  approval  of  the  court  is  an  additional  restric- 
tion and  limitation  upon  the  receiver's  authority,  but  does 
not  dispense  with  the  other  and  more  important  conditions. 
The  court,  therefore,  neither  adjudicates  upon  the  liability 
of  the  company,  nor  the  amount  for  which  assessments  shall 


i  Shaughnessy  v.  The  Rensselaer  ceiver  in  making  the  assessment 

Insurance  Co.,  21  Barb.,  605.     See,  and  giving  notice,  as  a  condition 

also,  Williams  v.  Babcock,  25  Barb.,  precedent  to  his  right  of  action, 

109.  Bangs  v.  Mcintosh,  23  Barb.,  591: 

2Devendorf     v.     Beardsley,     23  Sands  v.  Sanders,   28  N.  Y.,  416; 

Barb.,  656;  Thomas  v.  Whallon,  31  Jackson  v.  Roberts,  31  N.  Y.,  304. 

Barb.,  172.    And  see,  as  to  degree  3  Thomas  v.  Whallon,  31  Barb., 

of  particularity  required  of  the  re-  172. 


2G8 


RECEIVERS. 


[chap.  X. 


be  made,  nor  the  ratio  of  assessment,  but  merely  sanctions 
the  acts  of  the  receiver  in  doing  these  things.1 

§  330.  In  thus  making  assessments  upon  the  makers  of 
premium  notes  under  the  laws  of  New  York,  the  receiver 
acts  under  the  statute  in  a  ministerial  and  not  in  a  judicial 
capacity.2  And  his  action  being  ministerial  in  distinction 
from  judicial,  the  fact  that  a  former  receiver  has  made  an 
assessment  upon  the  same  notes,  which  still  remains  unen- 
forced, will  not  prevent  his  successor  from  making  anew  as- 
sessment for  the  same  purposes,  since  it  is  merely  repeating 
the  performance  of  a  condition  precedent  to  a  right  of  action 
upon  the  notes  by  the  receiver,  and  is  by  no  means  a  judi- 
cial determination  of  the  matter."  Nor  is  the  approval  of 
the  assessment  by  the  court  regarded  as  a  judicial  decision, 
or  as  conclusive  upon  the  maker  of  the  note  as  to  the  par- 
ticulars of  the  assessment,  in  an  action  brought  by  the  re- 
ceiver upon  the  note;  such  approval  by  the  court  only 
serving  to  place  the  act  of  the  receiver  in  making  the  as- 
sessment, in  the  same  position  as  the  act  of  the  directors, 
had  the  assessment  been  made  by  them.4  And  the  re- 
ceiver, in  levying  assessments  upon  such  notes,  may  properly 
include  as  a  portion  of  the  amount  to  be  raised  an  unpaid 
balance  of  former  assessments,  which  ought  to  have  been 
paid  by  delinquent  members,  but  which,  owing  to  the  ina- 
bility or  insolvency  of  such  members,  have  not  been  paid.5 

§  331.  As  regards  the  form  of  the  assessment  made  by 
a  receiver  in  this  class  of  cases  in  New  York,  it  is  held  that 
when  he  is  satisfied  from  the  liabilities  of  the  company,  and 
from  an  examination  of  all  classes  of  its  notes,  that  there 

1  Thomas  v.  Whallon,  31   Barb.,     Jackson  v.  Van  Slyke,  44  Barb., 


172.  See,  also,  McDonald  v.  Eoss- 
Lewin,  29  Hun,  87. 

-Thomas  v.  Whallon,  31  Barb., 
172:  Sands  v.  Sweet,  44  Barb.,  108. 
And  see  Bangs  v.  Duckinfield,  18 
N.  Y.,  592. 

s Sands  v.  Sweet,  44  Barb.,  108; 


116,  note  a,  overruling  Campbell  v. 
Adams,  38  Barb.,  132. 

4  Bangs  v.  Duckinfield,  18  N.  Y., 
592. 

5  Bangs  v.  Gray,  12  N.  Y.,  477, 
reversing  S.  C,  15  Barb.,  264. 


CHAP.  X.]  C0KP0KATI0XS.  2G9 

is  no  note  which  is  not  chargeable  to  its  full  amount  for 
liabilities  justly  attaching,  he  may  make  a  general  assess- 
ment upon  all  the  notes  to  their  full  amount,  without  re- 
gard to  classes,  and  without  specifying  the  name  of  the 
part}^  bound  to  contribute,  or  the  amount  of  the  note.1 
And  the  receiver  is  not  required  to  prove  all  the  facts  upon 
which  he  or  the  company  allowed  the  losses  for  which  the 
assessment  was  made.  All  he  is  required  to  show,  in  this 
respect,  is  that  sufficient  claims  for  losses  were  presented  to 
the  company,  or  to  him,  and  which  he  allowed,  to  make  up 
the  sum  for  which  the  assessment  was  levied.2 

§  332.  It  is  also  held  that  a  receiver  of  an  insolvent 
mutual  insurance  company,  under  the  laws  of  New  York, 
may  properly  allow  equitable  claims  for  losses  against  the 
company,  although  no  actions  to  recover  the  same  could  be 
maintained,  by  reason  of  the  neglect  of  the  claimants  to 
bring  them  within  the  time  fixed  by  the  charter  or  by-laws 
of  the  corporation,  or  by  statute.  And  when  such  claims 
have  been  allowed  the  receiver  is  bound  to  pay  them,  if 
there  be  funds  for  that  purpose ;  or  if  no  funds,  it  is  his  duty 
to  collect  enough  to  satisfy  such  demands  from  the  makers 
of  the  premium  notes.  And  the  maker  of  such  a  note  can 
not  defeat  an  action  thereon  by  the  receiver,  brought  for 
the  collection  of  such  an  assessment,  upon  the  ground  that 
the  receiver  might  have  avoided  allowance  of  the  claims 
upon  merely  technical  grounds,  such  as  that  they  were  not 
brought  within  the  time  prescribed  by  law  for  that  purpose.3 

§  333.  As  regards  the  right  or  power  of  a  receiver  of  a 
corporation  to  allow  set-offs  claimed  by  debtors  to  the  cor- 
poration, against  the  indebtedness  which  he  is  seeking  to 
enforce,  it  would  seem  that  the  right  of  set-off  is  dependent 
upon  and  governed  by  the  same  equitable  principles  which 
regulate  the  law  of  set-off  in  general,  as  between  creditors 
and  debtors.     And  where  the  debts  are  due  to  and  from  the 

i  Sands  V.  Sanders,  28  N.  Y.f  *  Sands  r.  Hill,  42  Barb.,  651; 
416.  Jackson  v.  Rob<  rts,  31  N.  Y.,  304. 

J  Sands  v.  Hill,  42  Barb.,  651. 


270 


RECEIVEKS. 


[chap.  X. 


same  persons  respectively,  and  in  the  same  capacity,  the 
riirht  of  the  receiver  to  allow  one  to  be  set  off  against  the 
other  may  be  regarded  as  clear ;  but  if  otherwise,  he  will 
not  be  justified  in  allowing  the  set-off.  And  in  cases  of  this 
nature,  when  there  is  doubt  in  the  mind  of  the  receiver  as 
to  what  course  he  should  pursue,  it  is  proper  and  fitting  that 
he  should  apply  to  the  court  for  instructions.1  And  when 
the  court,  appointing  receivers  over  an  insolvent  corpora- 
tion, is  empowered  by  statute  with  a  general  direction  and 
control  over  them  in  the  discharge  of  their  duties,  it  may, 
upon  a  summary  application,  direct  them  to  allow  a  set-off 
against  a  demand  which  they  are  seeking  to  enforce,  if  sat- 
isfied that  such  set-off  is  just  and  equitable.2  But  in  an 
action  by  receivers  of  an  insolvent  corporation  against  a 
shareholder,  to  recover  illegal  dividends  declared  by  the 
company,  in  violation  of  a  statute  prohibiting  any  dividends 
which  might  impair  the  capital  stock  of  the  corporation,  the 
defendant  shareholder  will  not  be  allowed  to  set  off  an  in- 
debtedness due  to  himself  from  the  corporation ;  since,  for 
the  purposes  of  such  action,  the  receivers  do  not  represent 
the  corporation,  but  its  creditors,  for  whose  benefit  the  suit 
is  brought.  The  dividends  thus  illegally  paid  being  a  fraud 
upon  the  creditors  of  the  insolvent  corporation,  and  the 
reparation  sought  being  the  restoration  of  the  funds  for  the 
benefit  of  the  creditors,  whom  alone  the  receivers  represent 
for  the  purposes  of  the  action,  claims  growing  out  of  inde- 
pendent matters  between  the  defendant  and  the  corporation 
itself  are  not  a  proper  subject  of  set-off.3 

§  334.  The  first  duty  of  receivers  of  insolvent  corpora- 
tions is  to  faithfully  collect  and  justly  disburse  the  assets  of 
the  corporation,  which  constitute  a  trust  fund  for  its  cred- 
itors. In  the  discharge  of  this  duty,  they  are  properly 
vested  with  a  certain  degree  of  discretion  in  the  compromis- 


i  In  re  Van  Allen,  37  Barb.,  225. 

2  Holbrook  v.  Receivers  of  Amer- 
ican Fire  Insurance  Co.,  6  Paige, 
220. 


3  Osgood  v.  Ogden,  4  Keyes,  70. 
See,  also,  Gillet  v.  Phillips,  13  N. 
Y.,  114. 


CHAP.  X.]  C0KP0KATI0XS.  271 

ing  and  settlement  of  demands  against  the  corporation ;  but, 
in  the  exercise  of  their  discretionary  powers,  they  should 
keep  constantly  in  view  the  interests  of  those  whom  they 
represent,  and  for  whom  they  act.  As  illustrating  this  dis- 
cretionary power,  it  is  held  that  receivers  of  an  insolvent 
banking  corporation  may  properly  decline  to  ratify  a  con- 
tract made  by  the  corporation  after  its  insolvency,  when 
they  are  satisfied  that  the  ratification  of  the  contract  would 
result  in  the  loss  of  the  fund  entrusted  to  their  charge.1  But 
a  receiver  of  an  insurance  company  would  seem  to  be  lim- 
ited, as  to  his  powers  in  the  adjustment  of  losses,  to  such 
powers  as  might  have  been  lawfully  exercised  by  the  officers 
of  the  company.  He  is  not,  therefore,  empowered  by  virtue 
of  his  appointment,  in  adjusting  proofs  of  loss  against  the 
company,  to  dispense  with  or  to  waive  express  stipulations 
of  the  policy  which  relate  to  the  substance  of  the  contract.2 
§  335.  "Where  receivers,  who  have  been  appointed  in  con- 
formity with  the  laws  of  the  state  for  winding  up  the  affairs 
of  an  insolvent  corporation,  are  authorized  by  the  statute 
to  settle  all  claims  against  the  corporation,  and  to  allow  all 
demands  of  whose  justice  they  are  satisfied,  they  are  lim- 
ited to  the  allowance  of  such  claims  as  might  be  recovered 
against  the  corporation,  either  at  law  or  in  equity,  if  suit 
were  brought.  And  they  have  no  authority  to  allow  a 
demand,  which  is  not  a  proper  charge  upon  the  fund  in 
their  hands,  without  the  consent  of  all  persons  interested  in 
having  the  claim  rejected,  the  receivers  in  this  respect  being 
considered  as  guardians  of  the  rights  of  all  persons  in  inter- 
est. And  where  such  receivers  have  disallowed  demands 
against  the  corporation,  and  the  matter  has  been  referred 
to  referees  for  adjustment,  it  is  the  duty  of  the  receivers  to 
resist  the  allowance  of  the  demands  before  the  referees,  and 
to  continue  their  defense  as  long  as  it  can,  in  their  opinion, 
be  rendered  effectual.3 

1  Suydam  v.  Receivers  of  Bank  of        -  Evans  v.  Trimountain  Mutual 
New  Brunswick,  2  Green  Ch.,  114.     Fire  Insuranco  Co.,  9  Allen,  329. 
See,  also,  Same  v.  Same,  id.,  276.  3  Attorney-General  v.  Life  &  Fire 

Insurance  Co.,  4  Paige,  224. 


272 


RECEIVERS. 


[chap. 


§  336.  It  is  competent  for  the  court  appointing  a  receiver 
over  an  insolvent  corporation  to  authorize  him  to  compro- 
mise disputed  and  doubtful  claims  by  the  allowance  of  such 
an  amount  as  he  may  deem  just  and  equitable ;  or  to  author- 
ize him  to  submit  such  claims  to  arbitration  when  this 
method  of  settlement  is  provided  by  statute.  The  court 
may  also  empower  him,  generally,  in  any  case  where  he 
may  deem  it  expedient  and  for  the  interest  of  the  creditors 
and  shareholders,  to  compromise  with  debtors  of  the  corpo- 
ration who  are  unable  to  pay  in  full.  And  the  receiver  of 
such  a  corporation  may  allow  its  officers  the  amounts  due 
to  them  for  salaries,  up  to  the  time  of  his  appointment,  as 
debts  to  be  paid  ratably  with  other  demands,  no  preference 
being  given  to  the  officers.1 

'  §  337.  "Where  an  incorporated  company  deposits  certain 
securities  with  its  creditor,  as  collateral  to  an  indebtedness 
due  from  the  corporation,  but  reserves  the  right  or  option 
of  having  such  securities  considered  as  an  absolute  payment 
upon  notifying  the  creditor  to  that  effect,  and  the  corpora- 
tion subsequently  passes  into  the  hands  of  a  receiver,  the 
option  reserved  to  the  company  may  be  legally  exercised  or 
expressed  by  the  receiver,  who  is  for  this  purpose  regarded 
as  the  legal  representative  of  the  corporation.  And  when 
the  requisite  notice  is  given  by  the  receiver,  it  has  the  effect 
of  making  the  deposit  of  collaterals  an  absolute  payment, 
and  thus  releasing  the  indebtedness.2 

§  338.  Receivers  of  an  insolvent  corporation,  appointed 
under  a  statute  authorizing  such  mode  of  winding  up  the 
affairs  of  insolvent  companies,  may  make  an  assignment  of 
a  chose  in  action  due  to  the  corporation,  without  using  the 
corporate  seal,  since  the  sale  or  assignment  by  the  receivers 
is  not  the  act  of  the  corporate  body  itself,  but  rather  the 
act  of  the  receivers  operating  under  the  statute.  And  a  sale 
by  the  receivers,  under  a  power  given  them  by  statute  for 
that  purpose,  is  as  effectual  to  convey  the  title  as  if  the 

lIn  re  Croton  Insurance  Co.,  3  Wrought  Iron  Railroad  Chair  Co., 
Barb.  Ch.,  642.  3  Dutch.,  4S4. 

-Phcenix  Iron  Co.  v.  New  York 


CHAP.  X.]  CORPORATIONS.  273 

right  of  property  was  vested  in  them,  and  cuch  sale  need 
not,  therefore.be  authenticated  by  the  corporate  seal.1  Not 
is  it  a  sufficient  ground  for  setting  aside  a  sale  of  the  prop- 
erty of  a  corporation,  made  by  its  receiver,  that  the  appli- 
cation for  the  order  of  sale  was  made  by  a  judgment 
creditor  of  the  corporation,  who  was  also  a  justice  of  the 
court  to  which  the  application  was  made,  or  that  it  is 
alleged  that  he  was  able,  by  means  of  his  official  position, 
to  exercise  an  improper  influence  upon  the  proceedings  in 
the  court  in  which  they  were  taken,  when  it  does  not  appea  r 
that  his  official  position  resulted  in  producing  any  different 
order  from  that  authorized  by  the  settled  practice  of  the 
court,  or  from  that  which  would  have  been  given  upon  the 
application  of  any  other  person.2 

§  330.  When  receivers  of  a  corporation  institute  an 
action  for  the  collection  of  money  demands  alleged  to  be 
due,  the  proceeding  being  carried  on  for  the  enhancement  of 
the  fund  in  the  receivers'  hands  and  for  the  benefit  of  those 
who  may  be  finally  determined  to  be  entitled  thereto,  if  they 
are  unsuccessful  in  such  suit,  the  defendant  is  entitled  to 
costs  out  of  the  fund  in  the  receivers,  hands.  And  in  such 
case,  the  defendant  will  not  be  required  to  await  the  final 
distribution  of  the  assets  of  the  corporation,  and  then  share 
with  other  creditors  or  parties  in  interest  pro  rata,  but  is  en- 
titled to  an  immediate  order  for  payment  of  the  costs  out 
of  any  funds  in  the  receivers'  hands.3 

1  Hoyt  v.   Thompson,    5    N.  Y.,  is  no  claim  nor  ground  of  claim 

320,  reversing  S.  C,  3  Sandf.,  410.  that  the  allowance  of  costs  in  the 

-Libby  v.  Rosekrans,  55  Barb.,  action  was  discretionary.     The  lia- 

218.  bility  of  the  receiver  in  whom  the 

3 Columbian     Insurance    Co.    v.  alleged    cause    of    action    became 

Stevens.  37  N.  Y.,  53G.    "The  right  vested  after  the  summons   herein 

of  the  defendants," jsays  Woodruff,  was   served,    and    by   whom    the 

J.,  p.  537,  "to  have  judgment  for  action  was  prosecuted,  is  made  by 

their  costs  in  such  an  action  as  the  section  321  of  the  code,  the  same 

present,  brought  against  them  for  as  if  he  had  caused  himself  to  be 

the  recovery  of  money  only,  is  ab-  made  a  party.     The  questions  here 

solute  as  well  by  the  law  before  as  are,    therefore:     1.    In    an    action 

since  the  code  of  procedure.  There  prosecuted  by  receivers  for  the  col- 
1S 


274 


RECEIVERS. 


[CHAP.  X. 


§  340.  Where  an  action  is  brought  by  the  state  against 
receivers  of  a  corporation,  for  the  purpose  of  enforcing  the 
collection  of  taxes  due  from  the  corporation,  and  judgment 
is  recovered  against  the  receivers,  the  judgment  should  be 
so  entered  as  to  be  enforced  only  against  the  funds  that  are 
or  should  be  in  the  hands  of  defendants  as  receivers.1 

§  341.  When  a  corporation  is  dissolved  under  proceed- 
ings in  a  state  court,  and  a  receiver  is  appointed  to  close  up 
its  affairs,  the  enforcement  and  collection  by  the  receiver 
of  a  demand  against  a  debtor  of  the  corporation  is  not 
a  "  taking  under  legal  process,"  within  the  meaning  of  the 


lection  of  alleged  money  demands, 
instituted  or  carried  on  for  the  en- 
hancement of  the  fund,  for  the 
benefit  of  those  to  whom  it  is  ulti- 
mately to  be  paid,  is  the  defendant 
entitled  to  costs  to  be  paid  to  him 
immediately,  or  must  he  stand  as 
a  general  creditor  to  await  the  final 
administration,  and  receive  only  (as 
the  case  may  be)  his  distributive 
share  of  the  fund  pro  rata,  with 
those  for  whose  benefit  he  has  been 
subjected  to  a  groundless  litigation? 
2.  Is  the  question  stated  addressed 
to  the  discretion  of  the  court,  in 
such  sense  that  no  appeal  lies  to 
this  tribunal  from  the  decision 
made  below?  It  was  conceded  on 
the  argument  that  the  costs  in 
question  are  chargeable  upon  and 
are  to  be  collected  out  of  the  fund. 
This  could  not  well  be  denied,  and 
yet,  in  a  case  in  which  it  does  not 
appear  by  anything  stated  in  the 
papers  that  there  are  other  claims 
on  that  fund,  of  any  sort,  except 
the  interests  of  the  stockholders  of 
the  company,  it  would  seem  to  fol- 
low, as  of  course,  that  the  receiver 
should  have  been  directed  to  pay 
those  costs.  Such  an  order  is  the 
appropriate  mode  of  reaching  funds 


in  the  receiver's  hands.  Not  being 
in  form  a  party  to  the  action,  no 
execution  could  reach  the  prop- 
erty he  holds,  and  being  the  custo- 
dian of  the  fund  as  an  officer  of 
the  court,  he  is  subject  to  immedi- 
ate direction  to  pay  it  to  a  party 
entitled.  If  it  be  assumed  that  the 
company  was  insolvent,  and  that 
the  funds  "which  the  receiver  holds 
or  may  collect  may  not  prove  suf- 
ficient to  satisfy  all  the  creditors  of 
the  company,  this  does  not,  in  my 
opinion,  upon  clear  and  just  rules 
governing  the  subject,  impair  the 
defendants'  right  to  be  paid  in  full, 
the  fund  being  confessedly  suffi- 
cient. The  receiver  is  pro  hac  vice 
the  representative  of  the  company, 
its  creditors  and  stockholders.  The 
action  is  prosecuted  for  the  increase 
of  a  fund  which  is  to  be  paid  to 
them.  It  is  not  according  to  any 
rule  of  justice  or  equity  toward 
third  parties  that  actions  like  the 
present  should  be  prosecuted  by 
the  company  or  such  representa- 
tive, otherwise  than  at  the  expense 
and  risk  of  the  fund  which  it  is 
sought  thereby  to  increase." 

1  Commonwealth  v.  Hunk,  26  Pa. 
St.,  235. 


CHAP.  X.]  CORPORATIONS.  275 

national  bankrupt  act,  so  as  to  constitute  an  act  of  bank- 
ruptcy.1 

§  342.  Where  a  receiver  is  appointed  over  an  insolvent 
insurance  company,  with  authority  to  collect  debts  and  to 
pay  liabilities,  upon  a  bill  by  judgment  creditors  of  the  cor- 
poration against  the  receiver,  to  compel  him  to  bring  suits 
for  the  recovery  of  its  assets,  it  is  not  proper  for  the  court 
to  decree  that  the  receiver  should  apply  the  money  in  pay- 
ment of  the  judgments;  but  he  should  be  directed  to  bring 
it  into  court,  in  order  that  the  court  itself  may  distribute  it 
to  the  parties  entitled.2 

*In   re   New   Amsterdam   Fire       2Benneson  v.  Bill,  62  111.,  408. 
Insurance  Co.,  6  Benedict,  368 ; 


2TG  RECEIVERS.  [CHAP. 


III.  Receivers  of  Insolvent  Corporations. 

§  343.  Statutes  authorizing  receivers  on  insolvency  of  corporation ; 
power  of  appointment  may  be  conferred  upon  executive 
officer. 

344.  Object  to  preserve  assets  for  benefit  of  creditors;  when  corpora- 

tion allowed  to  resume  management. 

345.  In  proceedings  to  forfeit  charter,  appointment  of  receiver  does 

not  revive  corporate  existence. 

346.  Allegations  as  to  insolvency ;  when  affidavit  on  information  in- 

sufficient ;  notice  and  rule  to  show  cause. 
346  a.  Shareholders  entitled  to  relief ;  fraudulent  transfers ;  discretion- 
ary powers  of  court. 

347.  Injunction  against  directors  and  officers  in  aid  of  receivership ; 

when  management  left  in  hands  of  officers. 

348.  Appointment  of  receiver  does  not  impair  lien  already  acquired 

by  creditors ;  attaching  creditors. 

349.  Lien  of  judgment  creditors  on  real  estate,  limited  to  interest  of 

corporation  at  time  of  appointment. 

350.  Creditors  may  be  prohibited  by  statute  from  proceeding  against 

corporation  after  receivership ;  creditors  may  come  in  under 
decree. 

351.  Appointment  operates  as  transfer  of  corporate  property  to  re- 

ceiver ;  right  to  rents  before  and  after  sale  by  receiver ;  legal 
services. 

352.  Liability  of  shareholders  for  unpaid  subscriptions  can  not  be  en- 

forced by  creditors,  but  only  by  receiver. 

353.  Statutory  proceedings   by   attorney-general   against   insolvent 

bank. 

354.  Eligibility  of  corporate  officers  as  receivers. 

355.  Answer  of  corporation  can  not  determine  litigation  between 

claimant  and  receiver. 

356.  Purchaser  at  receiver's  sale  acquires  no  right  of  action  against 

former  officer;  when  shareholder  estopped  from  questioning 
order  of  sale. 

357.  When  receiver  may  be  discharged. 

§  343.  Under  the  laws  and  practice  of  many  of  the 
states,  the  jurisdiction  of  equity  over  corporate  bodies  has 
.been  enlarged  to  the  extent  of  authorizing  the  appointment 
of  receivers,  upon  the  insolvency  of  the  corporation,  for  the 
protection  of  creditors  and  shareholders ;  and  the  statutory 


ciiAr.  x.] 


CORPORATIONS. 


277 


power  thus  conferred  is  in  some  of  the  states  sufficiently 
broad  to  authorize  the  court  to  dissolve  the  corporate  or- 
ganization, and  to  completely  annihilate  the  franchise.1 
Usually  the  power  of  appointing  receivers  over  corporations 
is  conferred  by  legislative  enactment  upon  the  courts  them- 
selves ;  but  in  some  instances  it  is  vested  in  executive  offi- 
cers of  the  government,  as  in  the  case  of  receivers  of  national 
banks,  appointed  by  the  comptroller  of  the  currency,  under 
the  provisions  of  the  national  banking  act  of  June  3,  18G4.2 
And  since  the  appointment  of  a  receiver  in  limine  is  not. 
regarded  as  a  strictly  judicial  act,  in  the  sense  of  being  a  de- 
cree or  judgment  affecting  title  to  property,  or  finally 
determining  the  rights  of  the  parties,  it  is  competent  for 
the  legislature  to  authorize  the  executive  department  of  the 


1  In  New  York,  the  appointment 
of  receivers  over  insolvent  insur- 
ance companies,  and  the  functions 
and  duties  of  such  receivers,  are 
largely  regulated  by  legislation. 
As  to  the  power  of  the  court  under 
such  legislation  to  adjudicate  upon 
claims  against  the  company  and  to 
pay  dividends,  and  as  to  the  right 
of  appeal  from  such  orders,  and  the 
right  of  other  creditors  to  intervene 
and  be  heard  concerning  such 
matters,  and  as  to  costs  upon  such 
intervention,  see  People  v.  Security 
Life  Insurance  Co.,  71  N.  Y.,  222. 
As  to  the  proper  method  of  .distri- 
bution of  the  assets  of  an  insolvent 
insurance  company  among  its  cred- 
itors, when  a  receiver  has  been 
appointed  under  the  New  York 
statute,  the  method  of  computing 
amounts  due  to  policy-holders  as  a 
basis  for  payment  of  dividends, 
priorities  among  different  classes  of 
creditors,  allowances  for  death 
losses,  and  set-offs  of  premium 
notes  due  from  policy-holders,  see 
People  v.  Security  Life  Insurance 


Co.,  78  N.  Y.,  114;  Attorney-Gen- 
eral v.  North  America  Life  Insur- 
ance Co.,  82  N.  Y.,  172;  Attorney- 
General  v.  Guardian  Mutual  Life 
Insurance  Co.,  82  N.  Y.,  336.  As 
to  proof  of  claims  of  creditors  and 
policy-holders  in  such  cases,  and 
extension  of  time  for  such  proofs 
and  notice  to  creditors,  see  People 
v.  Security  Life  Insurance  Co.,  79 
N.  Y.,  267.  As  to  the  right  of  such 
a  receiver  to  a  mandamus  to  com- 
pel the  superintendent  of  the  in- 
surance department  to  pay  to  the 
receiver  the  proceeds  of  securities 
deposited  by  the  company  with  the 
superintendent,  see  Attorney-Gen- 
eral v.  North  America  Life  Insur- 
ance Co.,  80  N.  Y.,  152.  As  to  the 
compensation  of  such  receivers,  and 
the  basis  upon  which  it  will  be 
allowed  upon  receipts  and  disburse- 
ments, see  Attorney-General  v. 
North  America  Life  Insurance  Co., 
89  N.  Y.,  94. 

2 13  U.  S.  Statutes  at  Large,  p.  99. 
See§  50;  U.  S.  Revised  Statutes, 
§  5234. 


278  RECEIVERS.  [CHAP.  X. 

government  to  appoint  receivers,  with  authority  to  take 
charge  of  and  wind  up  the  affairs  of  insolvent  corporations, 
such  as  banking  institutions.  ISTor  does  such  legislation  in 
any  manner  impair  the  obligation  of  the  original  contract 
with  the  corporation,  by  taking  from  it  the  right  secured 
by  its  charter  to  sue  and  be  sued  in  its  corporate  name,  the 
appointment  of  the  receiver  being  for  the  purpose  of  pre- 
serving and  not  destroying  rights.1 

§  344.  The  primary  object,  however,  of  proceedings  in 
chancery  against  insolvent  and  fading  corporations,  when 
such  proceedings  are  authorized  by  statute,  is  not  so  much  a 
dissolution  of  the  charter,  which  is  the  appropriate  duty  of 
a  court  of  law,  as  to  protect  and  preserve  the  corporate  as- 
sets for  the  benefit  of  creditors.  And  it  may,  therefore,  be 
regarded  as  discretionary  with  the  court  whether  to  continue 
the  possession  of  the  receiver,  or  to  allow  the  corporation 
to  resume  the  management  of  its  own  affairs,  if  satisfied 
that  the  interest  of  all  parties  will  be  best  subserved  in  this 
way.2  So  under  a  statute  authorizing  the  appointment  of 
receivers  over  insolvent  corporations,  the  court  will  decline 
to  appoint,  although  the  corporation  is  insolvent,  if  its  di- 
rectors, who  are  trustworthy  persons,  are  closing  up  its 
affairs,  and  if  all  the  creditors  and  all  stockholders  save 
complainant  are  satisfied  with  the  management  of  the 
directors.3 

§  345.  In  Louisiana,  the  right  of  the  courts  to  appoint  a 
receiver  for  the  protection  of  all  parties  in  interest,  pending 
proceedings  for  the  liquidation  and  settlement  of  the  affairs 
of  an  insolvent  corporation,  is  treated  as  too  well  established 
to  admit  of  question.4  And  Avhen  proceedings  are  pending 
for  the  forfeiture  of  the  charter  of  an  insolvent  corporation 
and  for  the  settlement  of  its  affairs,  the  appointment  of  a 
receiver  does  not  have  the  effect  of  reviving  the  corporate 


i  Carey  v.  Giles,  9  Ga.,  253.  3  City  Pottery  Co.  v.  Yates,  37  N. 

2  Fay  v.  Erie  &  Kalamazoo  Rail-    J.  Eq.,  543. 
road  Bank,  Harring.  (Mich.),  194.  *  Stark  v.  Burke,  5  La.  An.,  740. 


CHAP.  X.]  C0KP0EATI0NS.  279 

body,  it  being  merely  a  necessary  measure  for  protecting 
the  property  and  preserving  the  rights  of  creditors.1 

§  34G.  Where  the  statutes  of  a  state  provide  that  a  re- 
ceiver may  be  appointed  when  a  corporation  has  been  dis- 
solved, or  when  it  "  is  in  imminent  danger  of  insolvency,  or 
has  forfeited  its  corporate  rights,"  in  proceedings  against  an 
insurance  company  for  the  appointment  of  a  receiver  under 
the  statute,  it  is  sufficient  ground  for  the  relief  to  allege  that 
the  company  is  insolvent  and  unable  to  meet  its  liabilities, 
and  that  its  officers  have  misapplied  the  funds  and  are  rap- 
idly wasting  the  only  means  of  the  company  for  the  pay- 
ment of  losses.  Such  a  state  of  facts,  if  it  does  not  show 
an  absolute  condition  of  insolvency,  shows  at  least  that  there 
is  such  "  imminent  danger  of  insolvency  "  as  to  warrant  the 
appointment  of  a  receiver  under  the  statute.  And  the  facts 
alleged  being  sufficient  to  give  the  court  jurisdiction  of  the 
subject-matter,  and  authority  to  appoint  a  receiver,  its  pro- 
ceedings in  making  such  appointment,  even  if  erroneous,  can 
not  be  called  in  question  in  a  collateral  action.2  But  an  affi- 
davit alleging  the  insolvency  of  a  banking  corporation,  upon 
information  and  belief,  will  not  warrant  the  court  in  inter- 
posing its  extraordinary  aid  by  appointing  a  receiver,  when 
such  affidavit  is  contradicted  by  the  regular  official  reports 
of  the  bank,  made  under  oath  and  published  by  direction  of 
law,  since  such  reports  are  presumed  to  be  entitled  to  at  least 
as  much  weight,  judicially,  as  the  affidavit.3  And  the  courts 
will  not  exercise  their  statutory  power  of  appointing  receiv- 
ers over  an  insolvent  corporation,  upon  an  ex  parte  applica- 
tion, and  without  giving  the  defendant  an  opportunity  to  be 
heard.  But  upon  filing  a  petition  duly  verified,  setting 
forth  the  grounds  on  which  the  application  is  based,  an  order 
to  show  cause  should  issue  and  a  copy  thereof  should  be 

1  Stark  v.  Burke,  5  La.  An.,  740.  Pr.,  338.     It  is  otherwise,  however, 

-Howard  v.  Whitman,  29  Ind.,  where  such  affidavit  is  not  thus 

557.  contradicted.     Attorney-General  v. 

8  Livingston    v.   Bank    of     New  Bank  of  Columbia,  1  Paige,  511. 

York,  20  Barb.,  304;   S.  C,  5  Ab. 


230  RECEIVERS.  [CHAP.  X. 

served  upon  the  officers  of  the  corporation,  directing  them 
to  show  cause  on  a  future  day  why  the  application  should 
not  he  granted.1 

§  346  a.  Shareholders  are  entitled  to  a  receiver  over  the 
corporation  upon  a  bill  for  relief  against  a  note  and  mort- 
gage executed  by  the  officers  of  the  corporation  fraudulently 
and  without  adequate  consideration,  their  conduct  having 
been  such  as  to  render  it  unfit  that  they  should  retain  con- 
trol of  the  affairs  of  the  corporation  pending  the  litigation.2 
But,  after  the  appointment  of  a  receiver  under  a  statute  for 
winding  up  insolvent  corporations,  it  is  still  competent  for 
the  court  to  entertain  an  independent  action  by  a  judgment 
creditor  to  set  aside  an  alleged  fraudulent  transfer  of  the 
corporate  property,  the  receiver  having  taken  no  steps  to  set 
aside  such  transfer.  And  such  an  action  is,  in  effect,  an  ap- 
plication to  the  court  to  direct  the  receiver  in  the  discharge 
of  his  duty  and  may  be  maintained  as  such.3  So  when  the 
property  of  an  insolvent  corporation  has  passed  into  the 
hands  of  a  receiver,  and  the  corporation  is  managed  and  its 
business  conducted  through  the  receiver,  questions  pertain- 
ing to  the  administration  of  the  business  must  be  left  largely 
to  the  discretion  of  the  court  having  the  receivership  in 
charge.  And  a  court  of  appellate  jurisdiction  will  be  reluc- 
tant to  disturb  the  action  of  the  court  below  upon  such 
questions,  unless  in  cases  of  flagrant  error  and  injustice.4 

§  347.  Upon  the  appointment  of  a  receiver  of  all  the  as- 
sets and  effects  of  a  corporation,  for  the  purpose  of  seques- 
trating its  property  and  closing  up  its  affairs,  it  is  proper  for 
the  court,  in  connection  with  such  appointment  and  as  a 
part  of  the  order,  to  enjoin  the  directors  and  officers  of  the 

i  Devoe  v.  Ithaca  &  Owego  R.  Co.,  appointed,  see  Powers  v.  Hamilton 

5  Paige,  521.     As  to  the  sufficiency  Paper  Co.,  60  Wis.,  23. 

of  the  allegations  necessary  to  pro-  -'  Avery  v.  Blees  Manufacturing 

cure  a  receiver  of  an  insolvent  cor-  Co.,  27  N.  J.  Eq.,  412. 

poration    under    the    statutes    of  3  Monitor  Furnace  Co.  v.  Peters, 

Wisconsin,  and  as  to  the  functions  40  Ohio  St.,  575. 

and  powers  of  such  a  receiver  when  4  Wilmington  Stcs  Mining  Co.  v. 

Alien,  95  111.,  288. 


CHAP.  X.J  CORPORATIONS.  2S1 

corporation  from  collecting  any  debts  or  demands,  and  from 
delivering  or  encumbering  any  of  the  corporate  property  to 
any  other  person,  such  an  injunction  being  regarded  as  an 
appropriate  adjunct  of  the  receivership.1  It  by  no  mens 
follows,  however,  because  an  injunction  has  been  granted 
against  a  corporation,  restraining  it  from  continuing  in  busi- 
ness because  of  its  insolvency,  that  a  receiver  will  neces- 
sarily be  appointed  to  wind  up  its  affairs,  even  though  by 
the  statute  authorizing  the  proceeding  the  court  is  fully  em- 
powered to  appoint  a  receiver.  And  where,  in  such  case,  it 
is  apparent  to  the  court  that  a  receiver  is  not  necessary  for 
the  protection  of  the  interests  either  of  creditors  or  of  stock- 
holders, and  that  a  stranger  to  the  affairs  of  the  company 
can  not  wind  up  its  business  as  advantageously  as  its  direct- 
ors, a  receiver  will  be  refused  and  the  management  will  be 
left  in  the  hands  of  the  directors,  who  may  be  required  to 
act  under  the  immediate  control  and  direction  of  the  court.2 
But  the  court  will  not  leave  the  management  of  the  affairs 
of  a  corporation  in  the  hands  of  its  directors  or  officers, 
after  declaring  the  corporation  itself  insolvent,  unless  it  is 
shown  to  be  for  the  interest  of  the  creditors  and  share- 
holders that  this  course  should  be  pursued.  And  when 
fraudulent  and  improper  conduct  is  shown  against  the  offi- 
cers of  the  corporation,  in  making  illegal  sales  of  its  prop- 
erty and  effects  after  the  insolvency,  it  is  the  clear  duty  of 
the  court  to  take  the  management  out  of  the  hands  of  such 
officers,  and  to  place  it  in  the  hands  of  a  receiver,  and  the 
court  has  no  discretion  in  the  premises.3 

§  348.  As  regards  the  effect  of  appointing  a  receiver  of 
an  insolvent  corporation  upon  the  rights  of  creditors,  the 
decisions  are  not  altogether  harmonious,  owing,  doubtless, 
to  the  difference  in  the  various  statutes  in  force  in  the  sev- 

1  Morgan  v.  New  York  &  Albany  Paterson  Bank,  1  Green  Ch..  17:!: 

R.  Co.,  10  Paige,  290.  Nichols  v.  Perry  Patent  Arm  Co.,  3 

2Ra\vnsley    v.    Trenton    Mutual  Stockt.,  126. 

Life     &    Fire     Insurance     Co.,    1  "Nichols  v.   Perry   Patent  Arm 

Stockt.,  347.     See,  also,  Oakley  v.  Co.,  3  Stockt.,  126. 


2S2  RECEIVERS.  [CHAP.  X. 

eral  states,  under  which  the  courts  are  empowered  to  appoint 
receivers  over  corporate  bodies.  It  may,  however,  be  re- 
garded as  an  established  rule,  that  such  appointment  does 
not  affect  or  impair  a  lien  already  acquired  by  the  creditor 
upon  assets  of  the  corporation.  Where,  therefore,  under 
the  statutes  of  the  state  for  the  winding  up  of  insolvent  cor- 
porations, a  receiver  of  such  a  body  is  appointed  and  an 
injunction  is  granted  against  the  corporation,  such  proceed- 
ings do  not  have  the  effect  of  dissolving  an  attachment  of 
the  assets  of  the  corporation  previously  made  by  a  creditor, 
and  a  creditor  who  has  been  thus  diligent  in  acquiring  a 
lien  by  attachment  will  be  allowed  to  retain  it,  notwith- 
standing the  subsequent  proceedings.1  But  when  a  receiver 
is  appointed  to  take  charge  of  the  assets  of  a  banking  cor- 
poration for  the  benefit  of  creditors,  and  he  has  filed  his  bond 
with  security,  which  has  been  approved  by  the  court,  the 
assets  of  the  corporation,  though  not  yet  reduced  to  posses- 
sion by  the  receiver,  are  regarded  as  in  custody  of  the  law, 
in  gremio  legis,  and  not  liable  to  levy  under  an  attachment 
in  favor  of  a  creditor  of  the  bank.2 

§  349.  When  receivers  are  appointed  to  take  charge  of 
the  affairs  of  an  insolvent  corporation  pendente  lite,  it  is 
held  that  such  proceeding  does  not  prevent  the  general 
creditors  from  enforcing  their  demands  by  suit,  when  it 
does  not  appear  that  the  appointment  was  made  with  a 
view  to  a  settlement  and  an  equal  distribution  of  the  cor- 
porate funds  to  all  the  creditors,  but  only  to  provide  for  the 
safety  of  the  assets  pending  the  litigation.  And,  in  such  a 
case,  the  lien  acquired  by  a  judgment  creditor  upon  the  real 
estate  of  the  corporation  will  be  upheld,  notwithstanding 
the  appointment  and  possession  of  the  receivers,  and  even 
though  the  judgment  was  obtained  after  such  appointment 
and  possession.3     But  the  lien  acquired  by  the  judgment 

1  Hubbard  v.  Hamilton  Bank,  7  ments  upon  this  case  in  Atchison  v. 
Met.,  340.  Davidson,  2  Pin.  (Wis.),  48. 

2  Hagedon  v.  Bank  of  Wisconsin,  3  Ellicott  v.  United  States  Insur- 
1  Pin.  (Wis.),  61.     And  see  com-  ance  Co.,  7  Gill,  307.     But  see  At- 


CHAP.  X.]  CORPORATIONS.  283 

creditor,  under  such  circumstances,  is  only  a  lien  upon  such 
interest  in  the  real  estate  of  the  corporation  as  was  held  by 
it  at  the  time  of  the  appointment  of  the  receivers,  and  it  will 
not  be  extended  to  the  increased  value  of  the  property  re- 
sulting from  payments  of  purchase  money  made  thereon  by 
the  receivers.1 

§  350.  Where  the  statute  of  a  state,  regulating  the  wind- 
ing up  of  banking  corporations  by  receivers,  provides  that 
no  action  shall  be  maintained  against  a  bank  after  the  ap- 
pointment of  a  receiver,  but  that  all  creditors  shall  have 
their  remedy  under  the  provisions  of  the  statute,  the  courts 
will  not  entertain  an  action  brought  against  the  bank  by 
one  of  its  creditors,  such  an  enactment  being  regarded  as 
constitutional  and  within  the  power  of  the  legislative  branch 
of  the  government.2  And  where,  under  the  laws  of  the 
state,  a  receiver  for  winding  up  the  affairs  of  an  insolvent 
corporation,  upon  the  final  order  for  his  appointment  be- 
comes absolutely  entitled  to  all  the  property  and  effects  of 
the  corporation,  for  the  purpose  of  distributing  them  among 
its  creditors  and  shareholders,  such  final  order  is  in  the  nat- 
ure of  a  decree  in  an  ordinary  creditors'  suit,  against  execu- 
tors or  others  who  are  trustees  of  a  fund  upon  which  several 
creditors  have  claims  for  the  payment  of  their  debts  ratably, 
or  according  to  a  specified  order  of  priorities.  And  in  such 
case,  any  creditors,  who  are  not  nominal  parties  to  the  suit, 
may  make  themselves  such  parties  in  fact  by  coining  in  and 
presenting  their  claims  under  the  decree,  and  by  submitting 
themselves  to  the  jurisdiction  of  the  court  for  the  adjust- 
ment of  their  demands;  and  a  creditor  thus  coming  in  as  a 
quasi  party  to  the  action  is  entitled  to  the  full  benefit  of 
the  decree.3 

torney-General  v.  Continental  Life  Paige,  378.    And  see,  as  t«>  the  (iii-.c 

Insurance  Co.,  28  Hun,  360.  when  plaintiff,  in  an  action  pend- 

1  Ellicott  v.  United  States  Insur-  ing  against   an    insolvent    corpora- 

ance  Co.,  7  Gill,  307.  tion,  may  prove  up  his  claim  and 

-  Leathers  v.  Shiphuilders   Bank,  share  in  a  dividend  declared  by  the 

40  Me.,  386.  receiver.  Smith  v.    Manhattan  In- 

3  In  re  City  Bank  of  Buffalo,  10  surance  Co.,  4  Hun,  127. 


2S4:  RECEIVERS.    '  [CHAP.  X. 

§  351.  It  is  held  in  New  Jersey,  that  the  appointment 
of  a  receiver  over  an  insolvent  corporation,  under  the  stat- 
ute conferring  such  jurisdiction,  operates  as  a  conveyance 
or  transfer  of  all  the  property  of  the  corporation  to  the 
receiver  for  the  benefit  of  creditors,  and  to  be  distrib- 
uted in  accordance  with  the  statute.1  It  is,  therefore,  held 
that  rents  of  the  corporate  property,  accruing  after  its  sale 
by  the  receivers,  belong  to  the  purchaser  of  the  property, 
while  rents  accruing  after  the  appointment  of  the  receivers, 
but  before  a  sale  of  the  premises  by  them,  belong  to  the  re- 
ceivers for  the  benefit  of  creditors.2  But  an  action  will  not 
lie  against  the  receiver  to  recover  for  legal  services  rendered 
to  the  corporation  after  the  appointment  of  the  receiver, 
although  such  services  rendered  before  the  receivership  may 
be  recovered  against  him.  And  the  question  of  what  allow- 
ance should  be  made  out  of  the  funds  of  the  receivership 
for  counsel  fees  and  legal  services  rendered  to  the  corpora- 
tion in  resisting  the  appointment  of  a  receiver  would  seem 
to  be  wholly  within  the  discretion  of  the  court.3 

§  352.  When  the  affairs  of  an  insolvent  corporation  have 
passed  into  the  hands  of  a  receiver,  in  an  action  instituted 
in  behalf  of  all  the  creditors,  and  the  court  is  authorized 
and  required  by  the  statute  conferring  the  jurisdiction  to 
cause  the  property  and  assets  of  the  corporation  to  be  dis- 
tributed among  its  creditors  pro  rata,  it  will  not  permit  ac- 
tions to  be  prosecuted  against  shareholders  for  their  unpaid 

1  Corrigan   v.  Trenton   Delaware  title  to  its  property  did  not  change, 

Falls  Co.,  3  Halst.  Ch.,  489.    It  was  the  power  only  being  delegated  to 

held,  however,  in  an  earlier  case  in  the  receivers  to  take  charge  of  and 

New   Jersey,    that   the    corporate  sell  it.    Willink  v.  Morris    Canal 

property  did  not  vest  in  the  receiv-  and    Banking    Co.,   3  Green  Ch., 

ers  by  virtue  of  their  appointment,  377. 

and  that  such  appointment  did  not  -  Corrigan  v.  Trenton  Delaware 

necessarily  put  an  end  to  the  exist-  Falls  Co.,  3  Halst.  Ch.,  489.     See, 

ence  of    the  corporate  body,   the  also,   Fish  v.   Potts,  4  Halst.  Ch., 

receivers  being  substituted  in  place  277,  affirmed  on  appeal  to  the  court 

of  the  managers  and  directors  of  of  errors  and  appeals,  id.,  909. 

the  corporation  for  the  purpose  of  3  Barnes  v.  Newcomb,  89  N.  Y., 

closing  up  its  affairs,  and  that  the  108. 


Ofi« 


CHAP.  X.]  C0RP0RATT0XS.  285 

subscriptions  by  creditors  of  the  corporation,  whereby  they 
might  obtain  a  preference  over  other  creditors.  The  re- 
ceiver being  appointed  for  the  benefit  of  the  creditors,  and 
the  property  and  choses  in  action  of  the  corporation  being 
vested  in  him  for  their  benefit,  by  virtue  of  his  appoint- 
ment, if  the  shareholders  are  liable  to  the  corporation  for 
unpaid  balances  on  account  of  their  subscriptions  to  the 
capital  stock,  such  liability  can  be  enforced  only  by  the 
receiver,  and  not  by  individual  creditors.1 

§  353.  Under  a  statute  making  it  the  duty  of  the  attorney- 
general  of  the  state,  whenever  any  incorporated  bank  be- 
comes insolvent  and  unable  to  pay  its  debts,  to  apply  to  a 
court  of  equity  for  an  injunction  and  a  receiver,  and  for  the 
winding  up  of  the  corporation,  when  the  fact  of  the  insolv- 
ency of  the  bank  is  satisfactorily  established,  the  court  to 
which  the  application  is  addressed  has  no  discretion  left  as 
to  the  appointment,  and  a  receiver  will  be  granted  as  of 
course.2  And  it  is  not  necessary  that  the  information  filed 
by  the  attorney-general  should  be  verified  by  a  positive 
affidavit  as  to  the  insolvency  of  the  bank,  but  it  is  sufficient 
that  it  is  alleged  on  information  and  belief,  since  no  person 
but  the  officers  of  the  bank  could  swear  positively  as  to  its 
insolvency.3 

§  354.  Upon  compulsory  proceedings,  under  a  statute.  t'<  >r 
the  appointment  of  a  receiver  to  wind  up  an  insolvent  bank- 
ing corporation,  it  is  regarded  as  improper  to  appoint  an 
officer  of  the  bank  as  receiver,  since  if  the  officers  as  such 
are  unfit  for  the  management  of  the  bank  in  that  capacity, 
the  court  will  not  entrust  its  management  to  them  as  re- 
ceivers, the  rule  of  exclusion,  in  such  case,  being  based  upon 


1  Rankine  v.  Elliott,  16  N.  Y.,  377.  belief,  and  are  contradicted  by  tin' 

2  Attorney-General    v.    Bank    of  regular  official  reports  of  the  1  mi lk, 
Columbia,  1  Paige,  511.  made  under  oath    and    published 

:i  Attorney -General    v.    Bank    of  according  to  law,  a  receiver  will 

Columbia,    1    Paige,    511.     Where,  not   he   appointed.     Livingston   v. 

however,  the  allegations  as  to  in-  Bank  of  New  York,  20  Barb.,  304; 

solvency  rest  on  information  and  S.  C,  5  Ab.  Pr.,  338. 


286  RECEIVERS.  [CHAP.  X. 

principles  of  sound  public  policy.1  It  is  otherwise,  however, 
when  the  proceedings  are  instituted  voluntarily  by  the  cor- 
poration for  a  dissolution,  and  when  the  statute  regulating 
them  authorizes  the  appointment  of  officers  or  shareholders 
as  receivers.  And  under  such  circumstances,  it  is  proper  to 
appoint  the  president  and  book-keeper,  when  it  is  not  shown 
that  their  conduct  or  management  of  the  business  has  in 
any  manner  tended  to  produce  the  insolvency  of  the  cor- 
poration.2 

§  355.  Where,  under  the  laws  of  a  state,  the  appoint- 
ment of  a  receiver  over  an  insolvent  corporation  operates  as 
a  virtual  dissolution  of  the  corporate  body,  substituting  the 
receiver  in  lieu  thereof  as  to  all  its  property  and  effects,  in 
a  contest  concerning  the  right  to  certain  property  of  the 
corporation  in  the  hands  of  its  receiver,  the  answer  of  the 
corporation  itself  under  the  corporate  seal  can  have  no 
effect  in  determining  the  controversy,  since  the  litigation  is 
between  the  claimant  and  the  receiver  alone.3 

§  356.  While  a  purchaser  of  the  assets  of  an  insolvent 
corporation,  sold  at  a  receiver's  sale,  obtains  by  his  purchase 
such  title  as  the  receiver  himself  had,  he  can  not  by  such 
purchase  from  the  receiver  acquire  any  right  of  action 
against  a  former  officer  of  the  corporation,  to  compel  him 
to  account  for  assets  and  effects  of  the  corporation  in  his 
hands  in  the  capacity  of  trustee.4  But  a  shareholder  who 
has  joined  in  the  proceedings  for  a  dissolution  of  an  insolv- 
ent corporation  and  for  a  receiver  is  estopped  from  ques- 
tioning the  appointment,  and  from  questioning  an  order  of 
court  directing  the  receiver  to  sell  the  corporate  assets.5 

§  357.  Where  a  receiver  has  been  appointed  of  the  effects 
of  a  corporation,  under  a  statute  authorizing  receivers  in 
cases  of  insolvency,  it  is  proper  for  the  court  to  discharge 

i  Attorney-General   v.    Bank    of  3  Davenport  v.  City  Bank  of  Buf- 

Columbia,  1  Paige,  511.  falo,  9  Paige,  12. 

2  In  re  Eagle  Iron  Works,  8  Paige,  4  Mann  v.  Fairchild,  2  Keyes,  106. 

385,  affirming  S.  C,  8  Edw.  Ch.,  5  Battershall  v.  Davis,  31  Barb., 

385.  323. 


CHAP.  X.]  CORPORATIONS.  287 

him  upon  motion  of  the  defendant  corporation,  upon  its  sat- 
isfying the  court  that  it  is  in  solvent  circumstances  and  able 
to  resume  business,  and  that  the  best  interests  of  the  credit- 
ors will  thereby  be  secured.1  The  interests  of  the  creditors 
are  in  all  cases  to  be  kept  in  view  in  determining  whether 
the  receiver  shall  be  continued  or  discharged.  And  a  cred- 
itor who  has,  upon  his  own  bill,  obtained  the  appointment 
of  a  receiver,  is  not  entitled  as  of  right,  upon  the  settlement 
of  his  own  debt,  to  have  the  receiver  discharged,  when  the 
rights  of  other  creditors  have  intervened.  In  such  a  case, 
it  is  the  right  and  duty  of  the  court  to  protect  the  interests 
of  all  the  creditors  who  may  have  presented  their  demands.-' 

1  Ferry  v.  Bank  of  Central  New        2  Fay  v.  Ei-ie  &  Kalamazoo  Rail- 
York,  15  How.  Pr..  445.  road  Bank,  Harring.  (Mich.),  194. 


2SS  EECEIVEKS.  [CHAP.  X. 


IV.  Receivees  of  National  Banks. 

§  358.     Appointment  under  national  banking  act ;  effect  of  appointment ; 
corporation  still  exists  and  may  be  sued. 

359.  Receiver  holds  only  such  title  as  bank  had ;  can  not  avoid  pledge 

of  assets  as  collateral  made  by  bank;  exemption  from  tax- 
ation. 

360.  Receiver  the  agent  of  the  comptroller ;  his  functions  and  rights 

of  action. 
360  a.  May  enforce  individual  liability  of  shareholders. 

361.  Allegations  and  proof  of  his  appointment  in  suits  by  the  receiver. 

362.  Power  of  comptroller  not  exclusive  of  jurisdiction  of  equity ; 

when  courts  may  appoint  receiver. 

363.  State  court  has  no  jurisdiction  over  receiver  of  national  bank. 

364.  Property  of  bank  can  not  be  sold  by  creditor  as  against  receiver. 

§  358.  The  subject  of  the  appointment  of  receivers  over 
national  banks  incorporated  under  the  act  of  congress  of 
June  3,  1864,  and  of  the  functions  and  powers  of  such  re- 
ceivers, is  one  of  considerable  importance,  and  has  been 
presented  to  the  courts  in  several  different  aspects.  Under 
the  fiftieth  section  of  the  act  in  question,  commonly  known 
as  the  National  Banking  Act,  authority  is  conferred  upon 
the  comptroller  of  the  currency  to  appoint  receivers  over 
national  banks,  upon  their  refusal  to  pay  their  circulating 
notes,  and  the  general  duties  of  receivers  thus  appointed 
are  defined  by  the  statute.1     It  would  seem  that  the  ap- 

i  Act  of  June  3,  1864.  13  Statutes  assets  of  every  description  of  such 

at  Large,  99.     Section  50  contains  association,  collect  all  debts,  dues 

the  following  provision :    "  That  on  and  claims  belonging  to  such  asso- 

becoming  satisfied,  as  specified  in  ciation,  and  upon  the  order  of  a 

this  act,  that  any  association  has  court  of  record  of  competent  juris- 

refused  to  pay  its  circulating  notes,  diction,  may  sell  or  compound  all 

as  therein  mentioned,  and  is  in  de-  bad  or   doubtful   debts,   and   on  a 

fault,  the  comptroller  of  the  cur-  like  order,  sell  all  the  real  and  per- 

rency    may    forthwith    appoint   a  sonal  property  of  such  association, 

receiver,  and  require  of  him  such  on  such  terms  as  the  court  shall  di- 

bond  and  security  as  he  shall  deem  rect ;  and  may,  if  necessary  to  pay 

proper,  who,  under  the  direction  the  debts  of  such  association,  en- 

of  the  comptroller,  shall  take  pos-  force  the  individual  liability  of  the 

session  of  the  books,  records  and  stockholders  provided  for  by  the 


CHAP.  X.] 


CORPORATIONS. 


289 


pointment  of  a  receiver  under  this  section  has  the  effect  of 
superseding  the  authority  of  the  directors  to  exercise  the 
incidental  powers  necessary  to  carry  on  the  business  of  ban  Ic- 
ing, although  the  corporate  franchise  is  not  destroyed,  and 
the  bank  as  a  legal  entity  still  continues  to  exist.1  And  sin;;1 
the  bank  still  has  an  existence,  it  is  proper  to  institute  an 
action  against  it  in  its  corporate  capacity,  in  which  capacity 
it  should  be  defended.-' 

§359.  As  regards  the  title  acquired  by  a  receiver  ol  a 
national  bank  thus  appointed,  the  true  doctrine  seems  to  be 
that  he  holds  only  such  estate  and  title  as  the  bank  itself 
had  in  its  assets,  his  title  being  similar  in  this  respect  to  that 


twelfth  section  of  this  act ;  and  such 
receiver  shall  pay  over  all  money 
so  made  to  the  treasurer  of  the 
United  States,  subject  to  the  order 
of  the  comptroller  of  the  currency, 
ami  also  make  report  to  the  comp- 
troller of  all  his  acts  and  proceed- 
ings." Section  50  of  the  original 
act,  as  above  quoted,  is  substan- 
tially re-enacted  in  section  5234  of 
the  Revised  Statutes  of  the  United 
States,  as  follows:  "  On  becoming 
satisfied,  as  specified  in  sections 
5226  and  5227,  that  any  association 
has  refused  to  pay  its  circulating- 
notes,  as  tberein  mentioned,  and  is 
in  default,  the  comptroller  of  the 
currency  may  forthwith  appoint  a 
receiver,  and  require  of  him  such 
bond  and  security  as  he  deems 
proper.  Such  receiver,  under  the 
direction  of  the  comptroller,  shall 
take  possession  of  the  books,  rec- 
ords  and  assets  of  every  description 
of  such  association,  collect  all 
debts,  dues  and  claims  belonging 
to  it,  and  upon  the  order  of  a  court 
of  record  of  competent  jurisdiction, 
may  sell  or  compound  all  bad  or 
doubtful  debts,  and  on  a  like  order, 
19 


may  sell  all  the  real  and  personal 
property  of  such  association,  on 
such  terms  as  the  court  shall  di- 
rect ;  and  may,  if  necessary  to  pay 
the  debts  of  such  association,  en- 
force the  individual  liability  of  the 
stockholders.  Such  receiver  shall 
pay  over  all  money  so  made  to  the 
treasurer  of  the  United  States,  sub- 
ject to  the  order  of  the  comptroller, 
and  also  make  report  to  the  comp- 
troller of  all  his  acts  and  proceed- 
ings." 

'Bank  of  Bethel  v.  Pahquioque 
Bank,  14  Wal.,  383.  See,  also, 
Security  Bank  v.  National  Bank  of 
the  Commonwealth,  2  Hun,  2S7 ; 
Green  r.  Walkill  National  Bank,  7 
Hun,  G3. 

2 Security  Bank  v.  National  Bank 
of  the  Commonwealth,  2  Him.  2S7. 
See,  also,  Green  v.  Walkill  National 
Bank,  7  Hun,  63.  As  to  the  effect 
of  appointing  a  receiver  upon  the 
right  of  action  of  shareholders  to 
recover  from  the  directors  because 
of  fraudulent  and  negligent  man- 
agement of  the  bank,  see  Brim  fcer 
hoff  v.  Bostwick,  88  N.  Y.,  52. 


290 


RECEIVERS. 


[chap.  X. 


of  an  assignee  in  bankruptcy.  He  is  not  a  third  person  in 
the  sense  of  commercial  transactions,  and  can  not  avoid  a 
pledge  of  assets  of  the  bank  which  could  not  be  avoided  by 
the  corporation  itself.  When,  therefore,  the  bank  has  de- 
posited notes  constituting  a  part  of  its  assets  with  a  cred- 
itor as  security  for  advances,  the  bank  itself  being  concluded 
by  the  deposit  or  pledge,  the  receiver  is  not  entitled  to  such 
notes,  and  can  not  maintain  an  action  therefor  until  the 
creditor  or  pledgee  is  made  whole  for  his  advances.1  And 
the  personal  property  and  assets  of  the  bank  are  still  exempt 
from  taxation  under  state  laws,  notwithstanding  the  appoint- 
ment of  a  receiver,  being  regarded  in  legal  contemplation 
as  still  belonging  to  the  bank,  to  be  administered  according 
to  law.2 

§  360.  A  receiver  of  a  national  bank  appointed  by  the 
comptroller,  under  tins  section  of  the  act,  is  limited  as  to  his 
functions  by  the  object  of  the  receivership  and  the  duties 
which  it  involves.3  Practically  such  a  receiver  is  the  mere 
agent  of  the  comptroller  of  the  currency,  for  the  purpose  of 
brino-ino-  the  residue  of  the  assets  into  the  United  States  treas- 
ury.  And  while,  for  the  full  accomplishment  of  the  object 
of  the  statute,  and  the  due  performance  of  his  duties,  all 
necessar}^  authority  is  conferred  upon  him,  yet  this  authority 
does  not  extend  to  the  control  of  bonds  deposited  by  the 
bank  with  the  treasurer  of  the  United  States  to  secure  the 
currency  of  the  bank.  The  receiver,  therefore,  has  no  con- 
cern with  and  is  not  a  proper  party  defendant  to  a  suit 
brought  to  establish  title  to  such  bonds  by  one  claiming 
them  by  assignment  from  the  bank.4  He  has,  however,  un- 
doubted authority  to  bring  suits  to  enforce  demands  due 
the  bank,5  and  such  actions  may  be  instituted,  either  in  his 

3  Van  Antwerp  v.  Hulburd,  8 
Blatchf.,  282;  Ellis  v.  Little,  27 
Kan.,  707. 

■*  Van  Antwerp  v.  Hulburd,  8 
Blatchf.,  282. 

5  Bank  v.  Kennedy,  17  Wal.,  19; 
Piatt  v.  Crawford,  8  Ab.  Pr.,  N.  S., 


1  Casey  v.  La  Societe  de  Credit 
Mobilier,  U.  S.  Circuit  Court,  Dis- 
trict of  Louisiana,  June,  1875,  7 
Chicago  Legal  News,  313;  S.  C,  2 
Woods,  77. 

2  Rosenblatt  v.  Johnston,  104  U. 
S.,  462. 


CHAP.  X.]  CORPORATIONS.  291 

own  name  or  in  the  name  of  the  bank.1  And  it  is  not  neces 
sary  that  he  should  first  obtain  consent  of  the  comptroller, 
before  beginning  such  an  action,  the  case  being  clearly  dis- 
tinguishable from  that  of  an  action  against  shareholders  to 
enforce  their  personal  liability.2  The  authority  to  bring 
such  actions  for  the  enforcement  of  demands  due  to  the 
bank,  in  addition  to  being  expressed  by  the  act  of  congress, 
is  regarded  as  a  necessary  incident  to  the  proper  discharge 
of  the  receiver's  functions.3  But  the  receiver  can  not  ren- 
der himself  liable,  or  charge  the  estate  in  his  hands,  by  any 
executory  contract,  unless  authorized  so  to  do  by  the  pro- 
visions of  the  national  banking  act  and  by  the  order  of  a 
court  of  competent  jurisdiction  obtained  under  the  terms 
of  that  act.  And  under  an  order  authorizing  him  to  sell 
the  property  of  the  bank,  he  can  not  make  a  binding  con- 
tract to  exchange  or  barter  it  for  other  property,  and  can 
not  be  held  liable  in  an  action  for  damages  resulting  from 
his  refusal  or  inability  to  comply  with  such  a  contract, 
which  he  is  without  power  to  make.  And  his  powers  being 
limited,  one  who  deals  with  him  in  his  official  capacity  is 
chargeable  with  knowledge  of  his  authority  and  contracts  at 
his  own  peril.4 

§  360  a.  The  receiver  may  maintain  an  action  in  his  own 
name  to  enforce  the  individual  liability  of  shareholders,  such 
power  being  expressly  conferred  by  the  statute.  And  he 
is  not  required  to  proceed  by  bill  in  equity  against  all  the 
shareholders  to  collect  an  assessment  made  by  the  comp- 

297.    See,  also,  Kennedy  v.  Gibson,  of  the  association.    With  regard  to 

S  WaL,  498;   Bank    of    Bethel  v,  ordinary  assets  and  debts  no  special 

Pahquioque  Bank,  14  WaL,  383.  direction  is  needed ;  no  unusual  ex- 

1  Bank  v.  Kennedy,  17  Wal.,  19.  ercise    of    judgment    is    required. 

See,    also,     Kennedy    v.    Gibson,  They  are  to  be  collected  of  course ; 

supra;  Bank  of  Bethel  v.  Pahqui-  that  is  what   the   receiver    is  ap- 

©que  Bank,  14  WaL,  383.  pointed  to  do."  • 

2 Bank  v.  Kennedy,  17  WaL,  19.  3piatt  v.  Crawford,  8  Ab.  Pr.,  N. 

The  court,  Bradley,  J.,  say,  p.  22:  S.,  297. 

**  His  very  appointment  makes  it  his  *  Ellis  v.  Little,  27  Kan.,  707. 
duty  to  collect  the  assets  and  debts 


292  RECEIVERS.  [CHAP.  X. 

troller  of  the  currency,  but  may  proceed  by  separate  actions 
at  law  against  individual  shareholders.1  He  may  also  main- 
tain a  bill  in  equity  to  set  aside  a  transfer  of  his  stock  made 
by  a  shareholder  for  the  purpose  of  evading  his  individual 
liability.  And  a  letter  from  the  comptroller  of  the  cur- 
rency, directing  the  receiver  to  institute  legal  proceedings 
to  enforce  the  liability  of  shareholders  under  the  act  of 
congress,  is  sufficient  evidence  that  the  comptroller  has 
determined  it  to  be  necessary  to  enforce  such  liabilit}^.2 
Being  regarded,  however,  merely  as  the  instrument  of 
the  comptroller,  he  can  not  institute  proceedings  against 
the  stockholders  of  the  bank  to  enforce  their  personal  lia- 
bility, without  the  consent  and  direction  of  the  comptroller; 
since  it  is  for  the  latter  to  decide  when  it  is  necessary 
to  institute  such  proceedings,  and  whether  the  whole  or  a 
part,  and  if  only  a  part  how  much,  shall  be  collected.3 
But  the  determination  of  the  comptroller  as  to  the  neces- 
sity for  and  the  amount  of  the  assessment  is  conclusive 
in  an  action  by  the  receiver  against  a  shareholder  to  recover 
such  assessment.4  If,  however,  the  individual  liability  of 
shareholders  is  sought  to  be  enforced  by  a  general  creditors' 
bill,  pursuant  to  the  act  of  congress  of  June  30,  1876, 
amendatory  of  the  national  banking  act,  the  pendency  of 
such  suit  constitutes  a  good  plea  in  abatement  to  an  action 
brought  by  a  receiver  of  the  bank  subsequently  appointed 
by  the  comptroller  to  enforce  the  same  liability.5 

§  361.  In  an  action  brought  by  such  a  receiver  to  recover 
an  indebtedness  due  to  the  bank,  the  debtor  can  not  inquire 
into  the  legality  of  the  receiver's  appointment,  and  it  is 
sufficient  for  the  purposes  of  such  suit  that  he  is  appointed 
and  is  receiver  in  fact ;  since  the  action  of  the  comptroller 
in  making  the  appointment  is  conclusive,  until  set  aside  upon 
the  application  of  the  bank  itself.     It  is  not,  therefore,  nee 

1U.  S.  Revised  Statutes,  §  5234.  *  strong  v-  Southworth,  8  Ben., 

2Bowden  v.  Johnson,  107  U.  S.,  331. 

251.  5  Harvey  v.  Lord,  11  Biss.,  144. 
■i  Kennedy  v.  Gibson,  8  Wal.,  498. 


CHAP.  X.]  COKPOKATIONS.  293 

essary  in  such  action  that  the  receiver  should  specifically 
aver  the  existence  of  all  the  conditions  necessary  to  satisfy 
the  comptroller  that  a  receiver  should  be  appointed.1  And 
a  general  allegation  of  the  receiver's  appointment  by  the 
comptroller,  and  of  his  taking  possession  of  the  assets,  is 
sufficient,  without  setting  forth  in  detail  the  circumstances 
leading  to  such  action.2  As  regards  the  proof  required  upon 
the  trial  as  to  the  receiver's  appointment  and  authority  to 
sue,  it  would  seem  to  b3  sufficient  to  produce  a  certificate 
from  the  comptroller  of  the  currency,  approved  and  con- 
curred in  by  the  secretary  of  the  treasury,  reciting  the 
existence  of  all  the  facts  necessary  to  authorize  the  appoint- 
ment, and  the  fact  of  the  appointment  with  the  concurrence 
of  the  secretary  of  the  treasury.3 

§  362.  It  is  important  to  observe  that  the  power  exer- 
cised by  the  comptroller  of  the  currency,  in  appointing  re- 
ceivers over  national  banks,  under  section  50,  of  the  act  of 
congress  of  June  3,  1864,  is  not  exclusive  of  the  jurisdiction 
of  equity  to  appoint  receivers  over  such  banks,  in  cases 
where  the  courts  would  otherwise  be  authorized  to  interfere 
against  insolvent  corporations.4  And  a  judgment  creditor 
of  a  national  bank,  who  has  exhausted  his  remedy  at  law, 
and  who  is  entitled  to  a  receiver  under  the  law  and  practice 
of  the  state,  may  have  a  receiver  of  such  a  bank,  upon  a 
bill  in  the  federal  court  charging  that  its  officers  have  made 
fraudulent  payments  and  preferences,  and  that  there  is  no 
property  of  the  corporation  subject  to  seizure  or  execution, 
which  plaintiff  can  obtain  by  any  proceeding  at  law,  the 
comptroller  having  declined  to  appoint  a  receiver  for  want 
of  authority.5    And  in  the  absence  of  any  action  by  the 

iCadlet*.  Baker,  20  Wall.,  650.  v.    Merchants    National    Bank,    1 

2  Piatt  v.  Crawford,  8  Ab.  Pr.,  N.  Flippin,  568. 
S.,  297.  *  Irons  v.  Manufacturers  National 

» Piatt  v.  Beebe,  57  N.  Y.,  339.  Bank,  6  Biss.,  301.     This  was  an 

4  Irons    v.    Manufacturers    Na-  ordinary  creditors' bill,  alleging  the 

tional  Bank,  6  Biss.,  301;  Wright  recovery  of  judgment  against  de- 


294 


RECEIVERS. 


[chap.  X. 


comptroller  of  the  currency  toward  the  appointment  of  a 
receiver,  a  court  of  equity  may  grant  the  relief  upon  an 


fendant,  the  return  of  execution 
unsatisfied,  and  also  charging  the 
officers  of  the  defendant  corpora- 
tion with  having  made  fraudulent 
preferences  and  payments.     It  ap- 
peared from  an  exhibit  annexed  to 
the  bill,  that  certain  creditors  of 
the  bank  had  previously  applied  to 
the  comptroller  of  the  currency  to 
appoint  a  receiver,  which  he  de- 
clined to  do  on  the  ground  that  the 
relations  between  the  bank  and  his 
department  having  ceased,  he  had 
no  authority  to  interfere.     Upon 
demurrer  to  the  bill,  it  was  held 
that  the  court  had  full  jurisdiction 
in  the  premises,  and  a  receiver  was 
accordingly  appointed.     Blodgett, 
J.,   held   as    follows:      ".      .      It 
would  seem  from  an  examination 
of  the  banking  law,  that  the  comp- 
troller of  'the  currency  has  no  au- 
thority to  appoint  a  receiver  except 
in  certain  contingencies,   such  as 
the  failure  to  make  good  a  reserve, 
the  failure  to  reduce    circulating 
notes  on  demand,   the  failure   to 
make  good  the  capital  stock  when- 
ever the  same  becomes  impaired, 
and    the  failure    to  meet  certain 
other  requirements  of  the  banking- 
law.     Now,   neither  of  these  con- 
tingencies is  charged  in  this  bill  to 
have  occurred,  and  it  is  only  in  the 
case  of  such  contingencies  that  the 
comptroller  acquires  the  right  to 
appoint  a  receiver.     It  is  claimed 
on  the  part  of  the  defendant,  and 
has  been  very  strenuously  and  in- 
geniously argued,  that  there  is  no 
power  in  any  court  to  appoint  a 
receiver  for  this  bank,  because  the 
delegation  of   the   power   to   the 


comptroller  of  the  currency  to  ap- 
point a  receiver  in  certain  contin- 
gencies to  wind  up  the  affairs  of 
the  bank,  excludes  the  authority 
of  any  tribunal  or  person  to  ap- 
point a  receiver.     I  have  carefully 
examined  the  banking  law,  and  the 
decisions  of  the  supreme  court,  and 
those  of  various  states  made  since 
this  banking  law  took  effect,  upon 
the  various  questions  which  have 
arisen,  and  do  not  find  that  this 
precise    question    has    ever    been 
made.     But  I  can  see  nothing  in 
the  law  itself,  nor  in  the  decisions 
of  the  courts  upon  the  law,  so  far 
as  they  have  gone,  to  exclude  the 
idea  that  a  corporation  created  as 
this  is  under  an  act  of  congress  for 
certain  specific  purposes,  does  not 
come  within  the  general  provision 
of  the  law  regulating  the  remedies 
of  creditors  as  against  this  corpora- 
tion, as  much  as  against  any  other 
corporation,    except    where    there 
are  specific  provisions  to  meet  those 
cases.     For  instance,  a  holder  of 
the  circulating  notes  of  the  bank, 
who  had  presented  them  for  pay- 
ment, and  payment  had  been  re- 
fused, would  undoubtedly  find  this 
remedy  within  the  special  provis- 
ions of  the  banking  law  itself,  be- 
cause there  is  a  specific  provision 
meeting  that  case,  and  his  remedy 
would  undoubtedly  be  found  in  the 
action  of  the  comptroller   of   the 
cun-ency.     But,   in  a  large   class 
of  cases,  when  the  defendant  cor- 
poration  may  not  have  infringed 
any  of  the  specific    provisions  of 
the    banking  law,  which  author- 
ized   the    comptroller    to    appoint 


CHAP.  X.] 


CORPORATIONS. 


295 


ordinary  judgment  creditors'  bill,  notwithstanding  the  rem- 
edy provided  by  the  act  of  Congress.1 

§  363.  The  federal  courts  alone  having  jurisdiction  under 
the  acts  of  congress  over  national  banks,  the  fact  that  a 
receiver  of  such  a  bank  appointed  by  the  comptroller  of  the 
currency  is  substituted  as  a  defendant  in  an  action  in  the 
state  court,  originally  begun  against  the  bank,  does  not  en- 
large the  powers  of  the  state  court,  or  confer  upon  it  a 
jurisdiction  which  it  did  not  have  over  the  bank  itself.  The 
state  court,  therefore,  having  had  no  jurisdiction  over  the 


a  receiver,  there  may  be  cases 
where  they  have  at  some  time 
rendered  themselves  liable  to  be 
proceeded  against  as  any  other 
debtor  for  the  failure  to  pay  their 
debts.  The  allegations  in  this  bill 
are  very  full  that  this  bank  was 
insolvent  at  the  time  it  closed  its 
doors,  and  has  been  ever  since; 
that  it  failed  to  pay  its  debts ;  that 
a  large  amount  of  its  debts  are 
still  unpaid;  and  the  question  is, 
what  remedy  have  the  creditors  of 
this  bank  if  a  court  of  equity  can 
not  take  on  itself  the  administra- 
tion of  its  affairs  where  the  bank- 
ing law  does  not  provide  that  it 
shall  be  done  by  the  comptroller  of 
the  currency?  It  is  true  that  in  the 
case  of  Kennedy  v.  Gibson,  8  Wal- 
lace, the  supreme  court  state  that 
the  provision  of  the  banking  law 
making  the  stockholders  liable  for 
the  debts  of  the  corporation  to  the 
amount  of  the  stock  held  by  them 
respectively,  could  not  be  enforced 
except  under  the  action  of  the 
comptroller  tlirough  a  receiver  ap- 
pointed by  him.  Whether  that 
opinion  will  be  found  to  entirely 
express  the  full  meaning  and  in- 
tention of  the  supreme  court  when- 


ever they  come  to  examine  it  in  the 
light  of  future  cases  and  facts 
which  might  be  brought  before  it, 
is  doubted  by  myself,  at  least.  I 
do  not  feel  sure  that  the  supreme 
court  will  adhere  to  quite  as  broad 
a  statement  as  is  made  in  that  case ; 
but  still  they  may.  But  even  that 
does  not  oust  the  jurisdiction  of  a 
court  of  equity  to  take  hold  of 
whatever  assets  the  bank  may 
have,  aside  from  the  personal  lia- 
bility of  the  stockholders,  and  ad- 
minister those  as  it  would  the 
affairs  of  any  insolvent  corpora- 
tion. The  law  is  well  settled  in 
this  state,  and  the  courts  of  the 
United  States,  that  the  proper  rem- 
edy of  a  creditor  against  a  corpora- 
tion, when  the  assets  are  of  such  a 
nature  that  they  can  not  be  levied 
upon  and  sold  on  execution,  is  by 
a  proceeding  in  equity  to  marshal 
and  distribute  the  assets.  It  is  un- 
necessary to  cite  authorities  upon 
that  question.  The  law,  I  think, 
is  as  well  settled  as  any  branch  of 
the  law  can  be  considered  as  set- 
tled in  this  country." 

1  Wright  v.  Merchants  National 
Bank,  1  Flippin,  5(38. 


293  EECEIVEKS.  [CHAP.  X. 

bank  itself,  acquires  no  power  to  give  judgment  against 
the  receiver.1  And  the  receiver  is  regarded  as  an  officer  of 
the  United  States  in  such  sense  as  to  entitle  him  to  maintain 
an  action  to  recover  an  indebtedness  due  to  the  bank,  or  to 
recover  assessments  made  by  the  comptroller  of  the  currency 
in  the  federal  court  in  the  district  in  which  the  bank  is 
located.2  So  the  jurisdiction  conferred  upon  the  district 
courts  of  the  United  States,  over  all  suits  by  or  against 
national  banks,3  is  sufficient  to  authorize  such  courts  to  ap- 
point a  receiver  over  a  railway  company  at  the  suit  of  a 
national  bank.4 

§  364.  Although,  as  has  been  already  shown,  an  action 
may  be  instituted  against  a  national  bank  in  its  corporate 
capacity,  notwithstanding  the  appointment  of  a  receiver  by 
the  comptroller  of  the  currency,5  yet  the  property  of  the 
bank,  which  is  attached  at  the  suit  of  an  individual  creditor, 
can  not  be  subjected  to  sale  in  satisfaction  of  his  demand  as 
against  the  receiver.  And  it  is  the  receiver's  duty,  in  such. 
a  case,  to  apply  to  the  court  to  dissolve  the  attachment.6 
So  the  object  of  the  national  banking  act  being  to  secure  to 
the  United  States,  a  preference  or  priority  of  lien  upon  the 
assets  of  the  bank,  for  any  deficiency  in  redeeming  its  notes, 
and  then  to  secure  the  assets  for  ratable  distribution  among 
the  general  creditors,  this  object  will  not  be  allowed  to  be 
defeated  by  attachment  suits  against  the  bank  after  its  in- 
solvency.7 And  if  the  receiver  promptly  brings  suit  to 
recover  funds  of  the  bank  which  have  been  attached  after 
its  insolvency,  joining  all  parties  in  interest  as  defendants, 

1  Cadle  v.  Tracy,  11  Blatchf.,  5  Security  Bank  v.  National  Bank 
101.  of    the    Commonwealth,    2    Hun, 

2  Frelinghuysen  v.    Baldwin,    12    2S7. 

Fed.  Rep.,  395;  Price  v.  Abbott,  17  6  National    Bank    v.     Colby,    21 

Fed.  Rep.,  506;  Piatt  v.  Beach,  2  Wal.,  009. 

Ben.,  303.  T  National    Bank    v.    Colby,    21 

3U.  S.  Revised  Statutes,  §  563.  Wal.,    609;   Harvey   v.  Allen,   16 

*  Fifth  National  Bank  v.  P.  &  C.  Blatchf.,  29. 
S.  R.  Co.,  1  Fed.  Rep.,  190. 


CHAP.  X.]  CORPORATIONS.  297 

he  is  entitled  to  recover  such  assets,  notwithstanding  a  judg 
ment  in  the  state  court  in  favor  of  the  attaching  creditors, 
under  which  the  money  is  actually  received  by  them  before 
judgment  in  the  receiver's  suit.1  So  when  the  property  of 
the  bunk  is  levied  upon  by  state  authorities  in  satisfaction 
of  a  tax  levied  after  the  bank  became  insolvent,  it  is  proper 
to  enjoin  a  sale  of  such  property  upon  the  application  of 
the  receiver.2 

1  Harvey  v.  Allen,  16  Blatchf.,        2  Woodward  v.  Ellsworth,  4  Col., 
29.  580. 


CHAPTER  XL 

OF  RECEIVERS  OVER  RAILWAYS. 

I.  Principles  Governing  the  Jurisdiction, §  365 

II.  Receivers  in  Aid  of  Mortgagees  and  Bondholders,    .  376 

III.  Functions  and  Duties  of  the  Receiver, 390 

IV.  Preferred  Debts, 394  a 

V.  Actions  against  the  Receiver, 395 

VI.  Receivers'  Certificates, 398  c 


I.  Principles  Governing  the  Jurisdiction. 

365.  Courts  of  equity  averse  to  placing  railways  in  the  hands  of  re- 

ceivers ;  relief  refused  when  ordinary  remedies  are  available. 

366.  Receiver  appointed  on  bill  by  shareholder  to  set  aside  unauthor- 

ized lease. 

367.  Granted  for  protection  of  vendor's  lien  upon  insolvency  of  the 

company. 

368.  Granted  for  protection  of  common  easement ;  right  of  passage 

through  a  tunnel ;  injunction  refused. 

369.  When  receiver  refused  on  bill  to  recover  back  money  paid  for 

stock  illegally  issued. 

370.  When  United  States  court  in  bankruptcy  will  refuse  to  interfere 

with  receiver  previously  appointed  in  state  court ;  jurisdiction 

as  between  state  and  federal  courts. 
370  a.  Two  receivers  not  desirable. 
370  6.  Receivership  does  not  dissolve  corporation ;  injunction ;  taxes. 

371.  When  appointed  before  default;  failure  of  company  to  operate 

road ;  receiver  not  relieved  until  exigency  ceases. 

372.  Vendor's  right  to  distrain  notwithstanding  rent  charge ;  can  not 

distrain  upon  trust  property,  nor  locomotives. 

373.  Receiver  may  enjoin  state  officers  from  disposing  of  land  grant ; 

interference  with  trains  punished ;  stockholders'  meeting. 

374.  United  States  court  will  not  entertain  bill  for  account  against 

receiver  of  railway  appointed  by  state  court ;  mandamus  re- 
fused. 

375.  On  vacating  appointment  receiver  should  restore  management 

and  control  of  road  to  owners. 


CHAP.  XI.]  RAILWAYS.  299 

§  365.  While  the  jurisdiction  of  equity  over  railway  cor- 
porations, as  enlarged  by  the  statutes  and  practice  of  the 
various  states,  is  based  upon  and  exercised  in  accordance 
with  substantially  the  same  principles  which  govern  its 
jurisdiction  over  other  corporations,  the  courts  are  more  re- 
luctant to  lend  their  extraordinary  aid  by  the  appointment 
of  receivers  over  railways  than  over  other  corporate  bodies. 
The  importance  of  these  corporations,  as  being  quasi  public 
bodies,  and  the  peculiar  nature  of  their  property  and  fran- 
chises, sufficiently  explain  the  reluctance  with  which  equity 
interferes  with  their  management,  and  in  general  the  courts 
proceed  with  extreme  caution  in  placing  them  in  the  hands 
of  receivers.1  And  whenever  the  ordinary  remedies  pro- 
vided by  law  are  open  to  the  creditors  of  such  corporations 
for  the  enforcement  of  their  demands,  the  appointment  and 
continuance  of  a  receiver  in  office  for  a  long  period  of  years 
is  the  exercise  of  a  judicial  power  which  can  only  be  justi- 
fied by  the  pressure  of  an  absolute  necessity.  Thus,  when 
a  judgment  creditor  of  a  railway  company,  which  is  in  the 
receipt  of  large  earnings  and  operating  an  extended  line  of 
railway,  has  the  ordinary  means  open  to  him  of  enforcing 
his  judgment,  the  courts  will  not  countenance  the  taking  of 
the  railroad  property  from  its  rightful  possession,  and  put- 
ting it  into  the  hands  of  a  receiver ;  especially  when  the 
judgment  is  for  a  small  amount,  as  compared  with  the  re- 
ceipts of  the  company,  and  when  its  lien  is  seriously  con- 
troverted.2 Nor  does  the  alleged  violation  by  stockholders 
of  a  railway  company  of  an  injunction  restraining  the  con- 
solidation of  two  companies  warrant  the  appointment  of  a 
receiver,  when  it  is  not  shown  that  the  company  or  any  of 
its  directors  intend  to  surrender  or  transfer  its  property  in 

i  Milwaukee  &  Minnesota  R.  Co.  Overton  v.  M.  &  L.  R.  Co.,  10  Fed. 
v.  Soutter,  2  Wal.,  510;  S.  C,  Rep.,  866;  S.  C,  8  McCraiy,  436; 
Wool  worth's  C.  C,  49;  Stevens  v.  Meyer  v.  Johnston,  53  Ala..  287; 
Davison,  18  Grat.,  819;  Ruggles  v.  Kelly  v.  Trustees,  58  Ala.,  489. 
Southern  Minnesota  Railroad,  U.  S.  -Milwaukee  &  Minnesota  Kail- 
Circuit  Court,  District  of  Minne-  road  Co.  v.  Soutter,  2  Wal.,  510. 
sota,  5  Chicago  Legal  News,  110; 


300  RECEIVERS.  [CHAP.  XT. 

violation  of  such  injunction.  Nor  should  a  receiver  be  ap- 
pointed over  a  railway  without  notice  to  the  company,  when 
neither  fraud  nor  insolvency  is  charged  against  the  defend- 
ants, and  when  it  does  not  appear  that  the  property  of  the 
company  is  in  danger  of  removal  beyond  the  jurisdiction 
of  the  court,  the  controversy  being  solely  as  to  the  effect  of 
an  alleged  illegal  consolidation  with  another  railway  com- 
pany.1 So  it  is  not  the  province  of  a  court  of  equity  to 
conduct  the  business  of  a  railway  for  the  mere  convenience 
of  the  parties,  or  except  where  the  exercise  of  its  extraordi- 
nary jurisdiction  is  indispensable  for  the  protection  of  some 
clear  rig-ht  of  the  suitor.  And  when  a  receiver  has  been 
appointed  by  collusion  between  the  parties,  in  order  to  pro- 
tect the  road  from  adverse  proceedings  by  creditors,  and  to 
enable  the  parties,  through  the  receiver,  to  apply  the  entire 
income  to  the  improvement  of  the  property  and  not  to  the 
payment  of  its  debts,  the  court,  upon  being  apprised  of  the 
facts,  may  of  its  own  motion  discharge  the  receiver.2 

§  366.  While,  as  is  thus  seen,  courts  of  equity  are  ex- 
tremely averse  to  the  appointment  of  receivers  to  take 
charge  of  and  manage  railway  corporations,  yet  the  relief 
will  be  granted  where  the  aid  of  equity  is  indispensable  to 
secure  the  rights  of  the  legitimate  shareholders,  and  to  pre- 
vent a  failure  of  justice.  For  example,  when  the  board  of 
directors  of  a  railway  company,  without  authority  of  law 
and  without  the  sanction  of  a  lawful  meeting  of  the  share- 

1  Railway  Company  v.  Jewett,  37  lines  of  road,  which  had  been  sepa- 
Ohio  St.,  G49.  But  receivers  have  rately  mortgaged  prior  to  such  con- 
been  appointed  over  a  railway  upon  solidation,  the  bill  averring  that  if 
the  application  of  the  company  the  system  was  broken  up  as  an 
itself,  the  bill  averring  its  insolv-  entirety,  and  if  separate  receivers 
ency  and  inability  to  meet  its  were  appointed  over  the  several 
mortgage  and  floating  indebted-  lines  thus  separately  mortgaged, 
ness,  and  praying  the  appointment  irreparable  injury  would  result  to 
of  receivers  and  the  sale  of  its  all  persons  in  interest.  Wabash, 
property  for  the  benefit  of  all  con-  St.  L.  &  P.  R.  Co.  v.  Central  Trust 
cerned.  In  this  case,  the  railway  Co.,  22  Fed.  Rep.,  272. 
system  in  cmestion  was  made  up  2Sage  v.  M.  &  L.  R.  Co.,  5 
by  the  consolidation  of  numerous  McCrary,  643. 


(HAP.  XI.]  RAILWAYS.  301 

holders,  by  whom  alone  such  action  could  be  authorized, 
have  made  a  lease  for  years  of  the  road  and  property  of  the 
corporation,  the  lease  being  absolutely  null  and  void,  upon 
a  bill  filed  by  a  shareholder,  in  behalf  of  himself  and  such 
other  shareholders  as  may  elect  to  join  in  the  proceedings, 
to  set  aside  the  lease,  the  court  may  appoint  a  receiver  to 
take  charge  of  and  manage  the  road,  until  it  can  be  ascer- 
tained by  proper  inquiry  who  are  the  legitimate  share- 
holders, and  to  whom  the  custody  and  management  of  the 
road  shall  be  committed.1 

§  367.  In  England,  a  receiver  may  be  allowed  for  the 
protection  of  a  vendor's  hen  for  real  estate  sold  to  a  rail- 
way, upon  failure  to  pay  the  purchase  money  and  insolvency 
of  the  company.  Thus,  where  a  land  owner  contracts  with 
a  railway  company  to  convey  to  it  certain  lands  for  the  con- 
struction of  its  road,  and  on  its  failure  to  complete  the  pur- 
chase he  obtains  a  decree  for  the  specific  performance  of  the 
contract,  and  declaring  his  vendor's  hen  upon  the  premises 
for  the  balance  of  unpaid  purchase  money,  upon  the  insolv- 
ency of  the  company  the  vendor  may  have  a  receiver, 
although  not  entitled  to  an  injunction  to  restrain  the  com- 
pany from  operating  its  cars  over  and  using  the  land.  In 
such  case,  the  railway  corporation  is  treated  precisely  as  any 
other  insolvent  purchaser,  and  the  receiver  is  appointed  for 
the  preservation  of  the  property,  and  to  render  it  profitable 
for  all  parties  in  interest.2  But  in  such  case,  a  receiver  will 
not  be  appointed  before  a  final  decree  for  the  specific  per- 
formance of  the  contract.3 


JStevensu.  Davison,  18 Grat,  819.  assume    the    permanent    manage- 

-  Munns  v.  Isle  of  Wight  R.  Co.,  ment  of  a  business  or  undertaking, 

L.  R.,  5  Ch.,  414.  especially  when,  as  in  the  case  of  a 

3  Latimer  v.  A.  &B.  R.  Co.,  9  Ch.  railway,    such    management    had 

D.,  385.     It  is  worthy  of  note  that  been  delegated  by  Parliament  t  i 

the  English  Court  of  Chancery  was  the  company  itself.    Thus,  in  ( }ard- 

extremely  averse  to  appointing  a  ner  v.  London,  C.  &  D.  R.  Co.,  L. 

receiver  over  a  rail  way  witli  power  R.,    2    Ch.,    201,   which    was    an 

to  manage  and  operate  the  road,  application  by  debenture   holders 

upon  the  ground  that  it  would  not  for  a  receiver  over  a  railway,  Lord 


302 


RECEIVERS. 


[CHAP.  XI. 


§  368.     The  jurisdiction  of  equity  over  railway  corpora- 
tions, in  the  management  of  a  common  easement  or  right 


Justice  Cairns  says,  p.  212:     "But 
in  addition  to  the  general  principle 
that  the  Court  of  Chancery  will  not 
in  any  case  assume  the  permanent 
management  of  a  business  or  under- 
taking,  there  is  that  peculiarity  in 
the  undertaking  of  a  railway  which 
would,  in  my  opinion,  make  it  im- 
proper for  the  Court  of  Chancery  to 
assume  the  inanagement  of  it  at 
all.     When  Parliament,  acting  for 
the  public  interest,  authorizes  the 
construction  and  maintenance  of  a 
railway,  both  as  a  highway  for  the 
public,  and  as  a  road  on  which  the 
company  may  themselves  become 
carriers  of  passengers  and  goods,  it 
confers  powers  and  imposes  duties 
and  responsibilities  of  the  largest 
and  most  important  kind,  and  it 
confers  and  imposes  them  upon  the 
company  which    Parliament    has 
before  it,  and  upon  no  other  body 
of  persons.     These  powers  must  be 
executed    and    these    duties    dis- 
charged by  the  company.     They 
can  not  be  delegated  or  transferred. 
The  company  will,  of  course,  act  by 
its  servants,  for  a  corporation  can 
not  act  otherwise,  but  the  respon- 
sibility will  be  that  of  the  company. 
The  company  can  not,  by  agree- 
ment, hand  over  the  management 
of  the  road  to  the  debenture  hold- 
ers.    It    is    impossible  to  suppose 
that  the  Court  of   Chancery  can 
make  itself,  or  its  officer,  without 
any  parliamentary  authority,   the 
hand  to  execute  these  powers,  and 
all  the  more  impossible  when  it  is 
obvious  that  there  can  be  no  real 
and    correlative  responsibility  for 
the  consequences  of  any  imperfect 


management.  It  is  said  that  the 
railway  company  do  not  object  to 
the  order  for  the  manager.  This 
may  well  be  so.  But  in  the  view  I 
take  of  the  case,  the  order  would  be 
improper,  even  if  made  on  the 
express  agreement  and  request  of 
the  company." 

But  by  the  Railway  Companies 
Act  of  1867,  30th  and  31st  Victoria, 
chapter  127,  section  4,  it  was  pro- 
vided as  follows:  "The  engines, 
tenders,  carriages,  trucks,  machin- 
ery, tools,  fittings,  materials  and 
effects,  constituting  the  rolling 
stock  and  plant  used  or  provided 
by  a  company  for  the  purposes  of 
the  traffic  on  their  railway,  or  of 
their  stations  or  workshops,  shall 
not,  after  their  railway  or  any  part 
thereof  is  open  for  public  traffic,  be 
liable  to  be  taken  in  execution  at 
law  or  in  equity  at  any  time  after 
the  passing  of  this  act,  and  before 
the  1st  day  of  September,  1869, 
where  the  judgment  on  which  exe- 
cution issues  is  recovered  in  an 
action  on  a  contract  entered  into 
after  the  passing  of  this  act,  or  in 
an  action  not  on  a  contract  com- 
menced after  the  passing  of  this 
act ;  but  the  person  who  has  recov- 
ered any  such  judgment  may  obtain 
the  appointment  of  a  receiver,  and, 
if  necessary,  a  manager,  of  the  un- 
dertaking of  the  company,  on  appli- 
cation by  petition  in  a  summary 
way  to  the  Court  of  Chancery  in 
England  or  in  Ireland,  according  to 
the  situation  of  the  railway  of  the 
company ;  and  all  money  received 
by  such  receiver  or  manager  shall, 
after  due  provision  for  the  working 


CHAP.  XI.]  RAILWAYS.  303 

to  which  different  companies  are  entitled,  is  regarded  as 
well  settled  to  the  extent,  if  necessary,  of  appointing  a  re- 
ceiver to  hold  and  manage  the  easement,  should  occasion 
require.  And  where  several  railway  companies  are  tenants 
in  common  of  an  easement,  or  right  of  passage  through  a 
tunnel,  a  court  of  equity  will  entertain  a  bill  for  an  injunc- 
tion and  a  receiver,  upon  a  question  of  conflict  between  two 
of  the  companies  as  to  their  relative  rights  in  the  tunnel ; 
but  the  court  will  not  appoint  a  receiver  of  the  tunnel,  if, 
from  all  the  circumstances  of  the  case,  it  is  satisfied  that  the 
rights  of  the  parties  may  be  preserved  and  protected  with- 
out such  appointment.1 

§  369.  Upon  a  bill  filed  against  a  railway  company  by 
the  holder  of  certain  shares  of  stock,  which  are  alleged  to 
have  been  issued  in  violation  of  the  charter  and  contrary 
to  law,  the  bill  praying  an  injunction  and  a  receiver,  and 
that  the  company  may  be  decreed  to  pay  to  the  receiver  a 
sufficient  sum  to  enable  him  to  repay  to  plaintiff  the  amount 
advanced  for  the  stock,  no  sufficient  cause  is  presented  to 
justify  the  appointment  of  a  receiver,  when  the  moneys 
received  for  the  stock  have  passed  into  the  general  funds 
of  the  corporation,  and  can  no  longer  be  traced  or  identi- 
fied.2 


expenses  of  the  railway  and  other  discussion  of  the  effect  of  this  act, 

proper  outgoings  in  respect  to  the  and  of  the  circumstances  justifying 

undertaking,  be  applied  and  dis-  the  appointment  of  a  manager  as 

tributed  under  the  direction  of  the  well  as  receiver,  and  of  the  eligi- 

court  in  payment  of  the  debts  of  bility  of  the  directors  or  officers  of 

the  company  or  otherwise,  accord-  the  company  as  such  manager  ami 

ing  to  the  rights  and  priorities  of  receiver,  see  In  re  Manchester  & 

the  persons  for  the  time  being  inter-  Milf  ord  R.  Co. ,  14  Ch.  D. ,  645.    See, 

ested  therein ;  and  on  payment  of  also,  In  re  Birmingham  &  L.  J.  R. 

the  amount  due  to  every  such  judg-  Co.,  18  Ch.  D.,  155 ;  In  re  Southern 

ment  creditor  as  aforesaid,  the  court  Railway  Co.,  5  L.  R.,  Ir.,  165. 

may,  if  it  think  fit,  discharge  such  I  Delaware,  Lackawanna  &  West  - 

receiver  or  such  receiver  and  man-  era  R.  Co.  v.  Erie  R.  Co.,  6  C.  E. 

ager."    And  this  section  was  made  Green,  298. 

perpetual  in  1875,  38th  and  39th  2  whelpley  v.  Erie  Railway  Co., 

Victoria,   chapter  31.     For  a  full  6  Blatchf.,  271. 


304 


EECEIVEES. 


[CHAP.  XI. 


§  370.  It  is  held,  where  receivers  over  a  railroad  have 
been  appointed  under  proceedings  in  the  state  courts,  and 
have  taken  possession  of  the  property  of  the  road  and  en- 
tered upon  their  duties,  before  the  instituting  of  proceed- 
ings in  bankruptcy  in  the  United  States  courts  against  the 
company,  that  the  bankrupt  court  will  not  interfere  with 
the  possession  and  control  of  the  receivers  under  the  state 
court,  unless  for  some  cause  for  which  the  title  of  the  re- 
ceivers might  be  impeached  under  the  bankrupt  act.  And 
until  their  title  is  thus  impeached,  the  management  and 
control  of  the  road  and  of  the  property  in  the  hands  of  the 
receivers  will  be  left  to  the  state  courts.1  So  when  a  rail- 
way company  is  in  the  hands  of  a  receiver  appointed  by  a 
federal  court,  no  rights  can  be  acquired  under  condemnation 
proceedings  instituted  in  a  state  court  by  a  telegraph  com- 
pany against  the  railway  to  obtain  a  right  of  way  over  the 
property  of  the  latter,  if  such  proceedings  are  brought  with- 
out leave  of  the  court  appointing  the  receiver.2 

§  370  a.  The  practice  has  been  adopted  in  some  instances 
of  appointing  two  receivers  over  a  railway,  but  this  course 
is  ordinarily  regarded  as  unnecessary  and  embarrassing,  a 
single  receiver  being  preferred,  both  upon  considerations  of 
economy  and  of  harmonious  action.  And  when  two  re- 
ceivers have  been  appointed  in  the  first  instance,  by  consent 
of  the  parties,  as  the  representatives  of  different  interests. 
and  they  prove  unable  to  harmonize  in  the  management  of 
the  receivership,  it  is  proper  to  remove  them  and  to  appoint 
a  single  receiver;  and  such  receiver  should  be  wholly  unin- 
terested  in  the  affairs  of  the  company,  and  a  resident  within 
the  jurisdiction  of  the  court  appointing  him  and  in  which 
the  affairs  of  the  road  are  to  be  administered.3 

§3705.  It  is  to  be  observed  that  the  appointment  of  a 
receiver  over  a  railway  does  not  operate  as  a  dissolution  of 


i  Alden  v.  B.,  H.  &  E.  R.  Co.,  5 
Bank.  Reg.,  230. 
2  Western  Union  Telegraph  Co.  v. 


Atlantic  &  Pacific  Telegraph  Co. , 
T'Biss.,  367. 

3 Meier  v.  Kansas  Pacific  R.  Co., 
3  Dill.,  476. 


CHAP.  XI.]  RAILWAYS.  305 

the  corporation  itself.1  Such  appointment,  therefore,  and 
the  sale  of  the  entire  property  of  the  company  do  not  afford 
ground  for  judgment  of  ouster  against  the  directors  of  the 
company  elected  after  the  appointment  of  the  receiver.2 
And  the  fact  that  a  railway  lias  passed  into  the  hands  of 
receivers,  pending  proceedings  by  the  company  for  man~ 
damns  to  compel  the  delivery  of  municipal-aid  bonds,  affords 
no  ground  for  abating  the  mandamus  proceedings,  or  for 
refusing  to  comply  with  the  mandamus,  since  the  corpora- 
tion still  remains  in  being  and  capable  of  suing  and  of  being 
sued.3  So  an  injunction,  granted  by  a  state  court,  restrain- 
ing a  railway  company  from  obstructing  certain  streets  in 
a  city,  is  held  to  be  operative  upon  receivers  of  the  com- 
pany afterward  appointed  by  a  federal  court,  and  they 
may  be  punished  as  for  contempt  in  disregarding  such  in- 
junction, although  they  have  been  removed  from  their 
receivership  when  proceedings  for  contempt  are  instituted 
against  them.  Nor  can  one  of  the  two  receivers,  in  such 
case,  escape  liability  by  having  remained  inactive  in  the 
matter,  since  it  was  his  duty  to  prevent  disobedience  of  the 
injunction,  and  he  can  not  avoid  liability  by  mere  inaction.4 
So  the  fact  that  a  railway  has  passed  into  the  hands  of  re- 
ceivers, who  are  operating  the  road  and  receiving  its  earn- 
ings, constitutes  no  bar  to  a  judgment  in  favor  of  the  state 
against  the  company  for  taxes  due  to  the  state  upon  the 
gross  earnings  of  the  road  while  operated  by  the  receivers.5 
§  371.  While  receivers  over  railways  are  usually  ap- 
pointed in  aid  of  foreclosure  proceedings,  after  default  in 
payment  of  the  mortgage  indebtedness,  the  relief  has  been 


1  State  v.  Merchant,  37  Ohio  St.,  As  to  the  right  to  levy  upon  and 

251 ;  People  v.  B:irnett,  91  111.,  422.  sell  the  property  of  a  railway  which 

-  State  v.  Merchant,  37  Ohio  St.,  is  in  the  hands  of  a  receiver  of  a 

251.  federal    court,    to    satisfy    unpaid 

3  Peoples.  Barnctt,  91  111.,  422.  taxes  due  to  the  state  under  the 

*  Safford  v.  People,  85  111.,  558.  laws  of  Georgia,  see  State  v.  A.  & 

5 Philadelphia  &  Reading  R.  Co.  G.  R.  Co.,  3  Woods,  434. 
V,  Commonwealth,  104  Pa.  St.,  80. 
20 


306  RECEIVERS.  [CHAP.  XI. 

allowed  before  default  when  the  company  was  insolvent  and 
unable  to  pay  either  mortgage  or  floating  indebtedness,  and 
unable  to  pay  amounts  due  to  connecting  lines,  and  in  dan- 
ger of  the  absolute  destruction  of  its  business  and  about  to 
default  in  payment  of  interest  upon  its  mortgages.1  And 
where  a  statute  of  a  state  authorizes  and  provides  for  the 
appointment  of  receivers,  to  take  charge  of  and  operate  any 
railway  which  shall  discontinue  its  operations  for  a  given 
length  of  time,  the  object  of  the  statute  being  the  relief  of 
citizens  residing  along  the  line  of  the  suspended  road,  and  a 
receiver  is  accordingly  appointed  over  a  railway  company 
which  has  failed  to  operate  its  road  for  the  prescribed  time, 
while  the  court  may  and  will  restore  the  property  to  the 
company  or  to  its  rightful  owners,  upon  being  satisfied  of 
their  ability  and  willingness  to  operate  and  manage  the 
road,  it  will  not  stay  the  operation  of  the  receivership  for 
the  purpose  of  inquiring  as  to  the  causes  which  have  led  to 
the  failure  to  operate  the  road.  In  such  a  case,  the  public 
necessity  will  be  regarded  as  of  paramount  importance,  and 
the  receiver  will  not  be  relieved  until  the  court  is  satisfied 
that  the  exigency  has  ceased  which  called  for  the  appoint- 
ment.2 

§  372.  When  the  owner  of  lands  has  conveyed  them  to 
a  railway,  in  consideration  of  an  annual  rent  charge,  re- 
serving by  his  conveyance  the  right  to  enter  upon  the  lands 
conveyed,  and  to  distrain  for  rent  whenever  it  may  be  in 
arrear,  the  subsequent  appointment  of  a  receiver  over  the 
railway  will  not  be  allowed  to  disturb  the  vendor's  rights. 
And  upon  application  to  the  court  he  will  be  given  leave  to 
distrain,  notwithstanding  the  receiver's  possession,  such  a 


1  Brassey  v.  N.  Y.  &  N.  E.  R.  Co. ,  legislature,  in  the  event  of  the  in- 
19  Fed.  Rep.,  663;  S.  C,  22  solvency  of  the  company  and  its 
Blatchf . ,  72.  failure  to  pay  its  bonds  guaranteed 

2  In  re  Long  Branch  &  Sea  Shore  by  the  state,  after  the  appointment 
R.  Co.,  9  C.  E.  Green,  398.  As  to  of  a  receiver  in  behalf  of  its  bond- 
the  right  of  a  state  to  take  posses-  holders,  see  Ex  parte  Dunn,  8  S.  C, 
sion  of  a  railway,  under  an  act  of  207. 


CHAP.  XI.]  RAILWAYS.  307 

case  being  similar  to  that  of  an  application  by  a  stranger 
for  leave  to  bring  an  action  of  ejectment.1  But  the  court 
will  not,  under  such  circumstances,  grant  permission  to  dis- 
train upon  property  of  the  railway  company  which  had 
been  conveyed  to  trustees  for  the  benefit  of  creditors,  nor 
upon  locomotives  passing  over  the  land  for  the  purpose  of 
working  the  line.2 

§  373.  A  receiver  appointed  over  a  railway  company, 
who  is  authorized  by  the  order  of  his  appointment  to  secure 
and  protect  the  assets,  franchises  and  rights  of  the  company, 
as  well  as  a  land  grant  and  reservation  due  the  company 
from  the  state,  may  maintain  a  bill  in  equity  for  an  injunc- 
tion against  officers  of  the  state  to  prevent  them  from 
granting  to  other  persons  the  same  lands  which  had  been 
previously  granted  to  the  railway,  and  which  the  state  has 
attempted  to  forfeit.  Such  a  suit  by  the  receiver  is  regarded 
as  auxiliary  to  the  original  action,  and  is  analogous  to  a 
petition  by  a  receiver  to  the  court  to  protect  his  possession 
from  disturbance,  or  the  property  in  his  charge  from  de- 
struction.3 And  persons  who  interfere  with  the  running  of 
trains  upon  a  railway  which  is  in  the  hands  of  a  receiver, 
and  who  take  possession  of  the  trains  and  prevent  the 
employees  of  the  receiver  from  operating  them,  are  guilty  of 
a  contempt  of  court,  and  may  be  punished  by  proceedings 
for  contempt  in  the  cause  in  which  the  receiver  was  ap- 
pointed.4 But  the  primary  object  of  the  receivership  being 
to  preserve  the  railway  for  the  benefit  of  its  creditors,  the 
court  will  not  extend  its  jurisdiction  beyond  the  necessity 
for  such  preservation.  It  will  not,  therefore,  upon  the  peti- 
tion of  the  company,  assume  jurisdiction  over  the  question 
of  postponing  a  stockholders'  meeting  called  for  the  election 

^yton    v.   Denbigh,   Ruthin  <fe  'Davis  v.   Gray,   16  Wall.,  203, 

Corwen  R.   Co.,  L.  R.,  6  Eq.,  14  affirming  S.  C,  1  Woods,  420. 

See,  also,  S.  C,  id.,  488.  *Secor  v.  T.,  P.  &  W.  R.  Co.,  7 

2Eyton  v.   Denbigh,   Ruthin    &  Biss.,  513;  King  v.  O.  &  M.  R.  Co., 

Corwen  R.  Co.,  L.  R.,  6  Eq.,  488.  7  Biss.,  529. 


308  RECEIVERS.  [CHAP.  XI. 

of  officers,  the  exercise  of  such  jurisdiction  not  being  perti- 
lent  to  the  purposes  of  the  receivership.1 

§  374.  When  a  receiver  has  been  appointed  in  a  state 
court  over  a  railway  company,  and  its  franchises  are  de- 
clared forfeited,  and  its  property  is  placed  in  the  receiver's 
hands,  a  United  States  court  will  not  entertain  a  bill  for  an 
account  against  the  receiver  and  the  corporation,  but  will 
leave  the  party  aggrieved  to  pursue  his  remedy  by  applying 
to  the  court  which  appointed  the  receiver,  and  under  whose 
control  he  acts.2  So  when  a  railway  is  being  operated  by 
a  receiver,  appointed  by  a  court  of  competent  jurisdiction, 
mandamus  will  not  he  against  the  company  and  its  receiver 
to  direct  or  control  the  operations  of  the  road,  the  court  ap- 
pointing the  receiver  being  fully  empowered  to  determine 
all  questions  in  controversy.3 

§  375.  When  a  receiver  is  appointed  over  a  railway  com- 
pany, and  defendant  afterward  moves  and  plaintiff  consents 
that  the  order  of  his  appointment  be  vacated,  the  motion, 
being  concurred  in  by  all  parties  in  interest,  should  be 
granted  so  far  as  to  restore  the  possession,  management  and 
control  of  the  road  to  the  owner;  and  such  control  should 
manifestly  include  the  receipt  and  disbursement  of  its  future 
earnings.  It  is,  therefore,  error  for  the  court  to  require 
the  receiver  to  restore  the  railroad  and  its  appurtenances 
and  management  to  the  company,  but  to  still  require 
him  to  receive  and  disburse  the  earnings  and  income.4 
And  a  receiver  of  a  railway,  who  enters  into  a  fraudulent 
combination  with  third  parties  for  the  purchase  of  the  road 
at  a  foreclosure  sale,  furnishing  information  for  this  purpose 
in  violation  of  his  trust,  can  not  maintain  a  bill  against  such 
purchasers  for  an  accounting  and  for  the  recovery  of  a 
share  of  the  profits  arising  from  such  fraudulent  transaction.5 

i  Taylor  v.  P.  &  R.  R.Co    7  Fed.  ^L'Engle  v.  Florida  Central  R. 

Rep.,  381.  Co.,  14Fla.,  266. 

'i  Conkling  v.  Butler,  4  Biss.,  22.  &  Farley  v.  St.  P.,  M.  &  M.  R.  Co., 

s  State  v.  M.  &  C.  R.  Co.,  35  Ohio  4  McCrary,  138. 
St.,  154. 


fJJXW.  XI.J  RAILWAYS.  309 


II.  Receivers  in  Aid  of  Mortgagees  and  Bondholders. 

§  876.  Relief  granted  upon  principles  governing  applications  for  re- 
ceivers in  foreclosure  suits;  insolvency  of  company  and  in- 
adequacy of  security. 

377.  When  receiver  refused,  although  railway  company  in  default  in 

payment  of  interest. 

378.  Proceedings  regarded  as  in  rem;  receiver's  right  extends  only 

to  mortgaged  property ;  may  lease  other  lines. 

379.  Right  to  take  possession  upon  default. 

380.  Mortgagee  of  tolls  of  railway  entitled  to  receiver. 

381.  The  same;  judgment  at  law  not  necessary;  judgment  creditor 

not  entitled  to  priority  over  mortgages  of  earlier  date. 

382.  Relative  rights  as  between  different  mortgagees  of  tolls. 

383.  As  between  different  mortgagees  of  railway  without  priority, 

equity  will  not  permit  a  preference. 

384.  When  state  entitled  to  receiver  over  railway;  road  running 

through  different  states. 

385.  Receiver  of  tolls  of  turnpike  company  in  behalf  of  mortgagee. 

386.  Receiver  in  behalf  of  bondholders  to  prevent  land  grant  from 

lapsing. 

387.  On  application  for  receiver  in  aid  of  bondholders,  court  will  not 

determine  validity  of  bonds. 

388.  Relative  jurisdiction  of  state  and  federal  courts  on  applications 

for  receivers  over  railways. 
388  a.  Jurisdiction  of  United  States  court  over  consolidated  road  in 

different  states. 
388  b.  When  president  and  directors  regarded  as  receivers. 

389.  Right  of  company  to  discharge  receiver  on  payment  of  debt. 

§  376.  The  most  frequent  ground  for  invoking  the  ex- 
traordinary aid  of  equity  by  the  appointment  of  receivers  over 
railway  corporations  is  for  the  protection  of  mortgagees  and 
bondholders,  whose  securities  are  a  lien  upon  the  road,  upon 
the  failure  of  the  corporation  to  pay  the  principal  or  inter- 
est upon  its  obligations  thus  secured.  And  in  actions  for 
the  foreclosure  of  railway  mortgages,  given  to  secure  bonds 
issued  by  railway  companies  for  purposes  of  construction 
and  equipment,  the  courts,  upon  an  application  for  a  receiver 
in  behalf  of  the  mortgagees,  proceed  upon  the  usual  prin- 
ciples governing  applications  for  receivers  in   aid   of  the 


310 


RECEIVERS. 


[chap.  XI. 


foreclosure  of  mortgages;  and  in  conformity  with  such 
principles,  inadequacy  of  the  mortgage  security,  coupled 
with  insolvency  of  the  mortgagor,  may  be  regarded  as  suf- 
ficient ground  for  the  relief.1  And  while  the  courts  are 
reluctant  to  exercise  their  jurisdiction  in  this  class  of  cases, 
except  upon  a  strong  showing,  yet  if  the  road  and  its  ap- 
purtenances are  manifestly  an  inadequate  security  for  the 
mortgage  indebtedness,  and  the  corporation  is  shown  to  be 
insolvent,  a  receiver  will  be  appointed  and  the  company  and 
its  agents  will  be  enjoined  from  any  interference  with  him 
or  with  the  property.2  And  when,  upon  a  bill  to  foreclose 
mortgages  given  by  a  railway  company  to  secure  its  bonds, 
the  insolvency  of  the  company  and  inadequacy  of  the  secu- 
rity are  shown,  and  the  company  has  neglected  to  apply  its 
earnings,  which  are  the  only  fund  for  that  purpose,  in  pay- 
ment of  the  bonded  indebtedness  secured  by  the  mortgages, 
such  neglect,  in  connection  with  the  other  circumstances 
shown,  constitutes  an  abuse  sufficient  to  justify  the  inter- 
ference of  equity  by  a  receiver.3     So  it  is  proper  to  appoint 


1  Ruggles  v.  Southern  Minnesota 
Railroad,  U.  S.  Circuit  Court,  Dis- 
trict of  Minnesota,  5  Chicago  Legal 
News,  110;  Keep  v.  Michigan  Lake 
Shore  R.  Co.,  U.  S.  Circuit  Court, 
Western  District  of  Michigan,  6 
Chicago  Legal  News,  101 ;  Kelly  v. 
Trustees,  58  Ala.,  489.  As  to  the 
appointment  of  a  receiver  in  be- 
half of  judgment  creditors  of  a 
railway  in  an  action  to  sequestrate 
its  property  under  the  statutes  of 
New  York,  as  to  the  practice  in 
such  cases,  as  to  the  powers  and 
duties  of  such  a  receiver,  and  as  to 
his  relative  rights  compared  with 
those  of  a  receiver  over  the  same 
railway  in  a  foreclosure  suit,  see 
Whitney  v.  N.  Y.  &  A.  R.  Co.,  32 
Hun,  164. 

2  Ruggles  v.  Southern  Minnesota 
Railroad,  U.  S.  Circuit  Court,  Dis- 


trict of  Minnesota,  5  Chicago  Legal 
News,  110. 

3  Keep  v.  Michigan  Lake  Shore 
R.  Co.,  U.  S.  Circuit  Court,  Western 
District  of  Michigan,  6  Chicago 
Legal  News,  101.  This  was  a  bill 
of  foreclosure  by  trustees  named 
in  certain  railway  mortgages,  exe- 
cuted to  secure  the  bonded  indebt- 
edness of  the  road,  the  bill  also 
praying  that  a  receiver  might  be 
appointed.  The  court,  Withey,  J. , 
say,  p.  102:  "The  rule  asserted  is 
that  a  receiver  will  not  be  ap- 
pointed unless  there  has  been  abuse, 
or  is  danger  of  abuse,  on  the  part 
of  the  mortgagor  or  party  in  pos- 
session. Receivers  are  not  ap- 
pointed as  a  matter  of  course,  but 
it  rests  in  the  sound  discretion  of 
the  court.  Whether  the  power 
wiU  be  exercised  depends  always 


CHAP.  XI.] 


RAILWAYS. 


311 


a  receiver  over  a  railway  company  in  behalf  of  mortgage 
bondholders,  when  the  interest  upon  the  mortgages  has 
been  long  unpaid,  and  when  it  is  apparent  that  the  mort- 
gaged property  will  not  bring  sufficient  to  satisfy  the  in- 
debtedness.1 

§  377.  But  the  appointment  of  a  receiver  is  not  a  mat- 
ter of  course  in  aid  of  the  foreclosure  of  a  mortgage  given 
by  a  railway  corporation,  upon  default  in  the  payment  of 
any  portion  of  the  interest  of  the  indebtedness.2  And 
when,  by  the  terms  of  a  mortgage  or  deed  of  trust  exe- 
cuted by  a  railway  company  to  secure  its  bonds,  it  is  pro- 
vided that  the  trustee,  on  default  of  payment  either  of 
principal  or  interest,  may  take  possession  of  the  property 


upon  the  facts  and  rights  as  they 
appear  before  the  court.  There 
is  a  multitude  of  cases  showing 
where  the  power  has  and  where  it 
has  not  been  exercised,  each  case 
depending  on  its  particular  facts 
and  circumstances.  From  the  de- 
cided cases,  the  general  rule  which 
should  govern  is  abundantly  illus- 
trated. One  ingredient  to  justify 
the  appointment  of  a  receiver,  in  a 
case  of  foreclosure  of  mortgaged 
premises,  is  that  the  security  is  in- 
adequate. This  the  bill  avers ;  an- 
other, that  the  party  to  the  suit  is 
in  possession  by  himself  or  his 
ten:  i  nt,  and  the  proper  parties  are 
before  the  court ;  such  is  this  case ; 
again,  the  mortgagor,  or  party 
personally  liable  for  the  debt,  must 
be  shown  to  be  irresponsible  for 
any  deficiency  on  sale  of  the  mort- 
gaged premises ;  this  the  bill  shows. 
A  large  amount  of  interest  is  over- 
due and  unpaid.  From  the  case 
before  the  court,  it  would  seem 
that  the  interest  must  be  met  from 
the  earnings  of  the  road,  and  yet 
the  net  earnings  are  not  applied. 
Is  it  not  an  abuse  on  the  part  of 


the  mortgagors,  if  insolvent,  that 
the  net  earnings  are  not  applied  to 
the  interest?  What  excuse  exists 
for  the  omission?  The  obligation 
of  the  mortgagor  is  common  to  all 
mortgagors,  viz:  to  meet  its  ac- 
crued indebtedness,  and  if  its  only 
means  with  which  to  meet  the 
interest  are  not  thus  applied,  such 
neglect  of  a  paramount  obligation 
is  little  less  than  an  abuse  which 
will  justify  the  appointment  of  a 
receiver,  in  connection  with  all  the 
facts  in  this  case.  The  mortgage 
provides  that  in  case  of  default  in 
payment  of  any  interest  or  princi- 
pal of  the  secured  debt,  the  trustees 
may  take  possession  of  the  road 
and  property  in  person,  or  by  a 
receiver,  and  operate  the  road.  The 
court  is  of  opinion  that  a  receiver 
should  be  appointed  with  the  usual 
1  lowers  in  such  cases.  The  order 
may  be  drawn  and  submitted  to 
the  court  for  approval." 

1  Pullan  v.  Cincinnati  &  Chicago 
R.  Co.,  4  Biss.,  35. 

2  Williamson  v.  New  Albany  R. 
Co.,  1  Biss.,  198;  Tysen  v.  Wabash 
R.  Co.,  8  Biss.,  247. 


312  RECEIVERS.  [CHAT.  XI. 

mortgaged,  but  the  trustee  upon  default  does  not  elect  to 
take  possession,  and  institutes  an  action  for  the  appointment 
of  a  receiver,  in  the  absence  of  any  facts  showing  an  abuse 
in  the  management  of  the  company  the  court  will  exercise 
an  equitable  discretion  in  the  matter,  and  will  refuse  to 
allow  a  receiver  when  it  would  cause  irreparable  injury  to 
the  company.1  And  in  the  exercise  of  the  discretion  vested 
in  courts  of  equity  touching  the  appointment  of  receivers, 
a  receiver  will  not  be  appointed  in  aid  of  the  foreclosure  of 
a  railroad  mortgage  when  much  greater  injury  would  result 
to  all  parties  in  interest  by  such  appointment  than  by  per- 
mitting the  road  to  be  operated  by  the  company  pending 
the  foreclosure  proceedings.2 

§  378.  Proceedings  for  the  appointment  of  receivers,  in 
actions  for  the  foreclosure  of  railway  mortgages,  are  re- 
garded as  in  ran,  to  the  extent  that  they  seek  to  reach  such 
property  of  the  corporation  as  was  mortgaged  to  secure  the 
bondholders.  And  the  right  of  the  receiver  to  the  posses- 
sion of  the  corporate  property,  being  subject  to  the  same 
limitations  governing  the  rights  of  the  mortgage  bondhold- 
ers in  whose  behalf  he  was  appointed,  extends  only  to  the 
specific  property  which  is  the  subject  of  the  litigation  and 
covered  by  the  mortgage.3  But  a  court  of  equity,  having 
appointed  a  receiver  over  a  railway  in  an  action  for  the 
foreclosure  of  a  mortgage,  may  exercise  all  necessary  pow- 
ers writh  reference  to  the  protection  and  preservation  of  the 
property  for  the  benefit  of  its  creditors  which  are  not  in 
excess  of  the  powers  of  the  corporation  itself.  It  may,  there- 
fore, authorize  the  receiver  to  lease  other  lines  of  railway  to 
be  operated  in  connection  with,  and  as  a  part  of,  the  road 
over  which  he  is  appointed,  when  such  course  is  necessary 
for  the  interests  of  the  creditors.4 

i  Williamson  v.  New  Albany  R.  -Tysen  v.  Wabash  R.  Co..  8  Biss., 
Co.,  1  Biss.,  198;  Union  Trust  Co.     247. 

v  St.  L.,  I.  M.  &  S.  R.  Co.,  4  Dill.,        a  Noyes  v.  Rich,  52  Me.,  115. 
114#  ■»  Gibert  v.  W.  C,  V.  M.  &  G.  S. 

R.  Co.,  33  Grat.,  536. 


CIIAI*.  XI.]  RAILWAYS.  313 

§  379.  Railway  mortgages,  or  deeds  of  trust  in  the  nature 
of  mortgages,  frequently  contain  a  provision  authorizing 
the  trustee  or  mortgagee,  in  case  of  default,  to  take  posses- 
sion of  and  manage  the  railway  and  to  receive  and  apply 
its  income.  In  such  cases,  where  the  trustees  have  a  com- 
plete remedy  at  law  to  recover  possession,  the  court  may 
properly  refuse  to  appoint  a  receiver  when  it  does  not  appear 
that  the  trustees  have  made  any  effort  to  obtain  possession, 
or  that  the  mortgaged  premises  are  an  inadequate  security.1 
If,  however,  the  trustees  neglect  and  refuse  to  take  posses- 
sion after  default  and  a  request  from  the  bondholders,  upon 
a  bill  by  the  bondholders  to  enforce  the  trust,  a  receiver  may 
be  appointed,  the  right  to  the  relief,  in  such  case,  not  being 
dependent  upon  inadequacy  of  the  mortgage  security.2  Xor 
is  the  right  to  relief,  in  such  cases,  confined  to  actions  for 
the  foreclosure  of  the  mortgage,  since  a  receiver  may  be 
appointed  upon  a  bill  seeking  to  obtain  possession  after  de- 
fault, the  railway  company  being  insolvent  and  the  security 
inadequate.3  So  a  receiver  may  be  appointed,  after  default, 
in  an  action  brought  by  a  surviving  trustee  in  the  deed  of 
trust  to  enforce  the  trust  and  to  obtain  possession  of  the 
property.4  And  it  has  been  held,  where  the  deed  of  trust 
authorized  the  trustees  to  take  possession  upon  default,  that 
the  default  itself  constituted  sufficient  ground  for  a  receiver, 
without  showing  the  inadequacy  of  the  mortgage  security.5 

1  Rice  v.  St.  Paul  &  Pacific  R.  Co.,  curred  in  transporting  freight  or 
24  Minn.,  464.  But  see  Allen  v.  passengers,  or  for  injuries  to  per- 
D.  &  W.  R.  Co.,  3  Woods,  316.  sons  or    property,  which  had  ac- 

2  Wilmer  v.  A.  &  R.  A.  L.  R.  Co.,  crued  within  six  months  prior  to 
2  Woods,  409.  the  appointment,  should  be  paid  by 

3 Dow  v.  M.  &  L.  R.  Co.,  20  Fed.  the  receiver  out  of  the  earnings  of 
Rep.,  260.  In  this  case,  the  court  the  road,  or  if  not  so  paid  should 
required  plaintiffs,  as  a  condition  constitute  a  lien  upon  the  road  pai-a- 
to  the  appointment  of  the  receiver,  mount  to  that  of  the  mortgage  in- 
to consent  that  all  debts  due  to  debtedness. 

other  companies  for    freight  and  4  Sacramento    &    P.    R.    Co.    v. 

ticket  balances,  all  debts  for  labor,  Superior  Court,  55  Cal.,  453. 

supplies     and    materials    used    in  5 Allen  v.   D.    &  W.    R.    Co.,   3 

equipping,  repairing  or  operating  Woods,  316.     But  in  this  case,  ad- 

the  road,   and  all  obligations  in-  ditional  grounds  for  the  relief  were 


314  RECEIVERS.  [CHAP.  XI. 

And  a  receiver  has  been  appointed  after  a  decree  of  fore- 
closure, in  behalf  of  bondholders  entitled  to  the  net  income 
of  the  road,  when,  under  the  laws  of  the  state,  no  sale 
could  be  had  until  the  expiration  of  six  months  from  the 
date  of  the  decree.1 

§  380.  The  doctrine  of  the  English  Court  of  Chancery 
was,  that  where  a  company,  incorporated  by  act  of  parlia- 
iiii  nt  as  a  common  carrier,  is  authorized  by  its  act  of  incor- 
poration to  borrow  money  by  mortgaging  its  tolls,  and  in 
pursuance  of  such  authority  has  mortgaged  its  tolls  to  secure 
advances  and  loans  obtained  for  carrying  on  the  undertak- 
ing, the  mortgagee  is  entitled  to  the  aid  of  equity  by  a  re- 
ceiver upon  non-payment  of  his  principal  when  due.2  And 
the  receiver  thus  appointed  will  be  ordered  to  pay  the  costs 
of  the  proceeding,  and  then  to  keep  down  the  interest  on 
the  mortgages  and  pay  the  balance  into  court.3  It  is  held,  in 
such  cases,  that  the  power  of  mortgaging  the  corporate  tolls 
and  rents  necessarily  carries  with  it  as  an  incident  all  the 
appropriate  and  necessary  remedies  to  compel  payment. 
Equity  may,  therefore,  appoint  a  receiver  of  the  tolls  in  an 
action  to  foreclose  the  mortgage,  even  though  the  power  is 
not  conferred  in  express  terms  by  the  act  of  parliament,  the 
remedy  being  a  necessary  incident  of  the  powers  expressly 
granted.4  And  it  is  no  objection  to  the  appointment  of  a 
receiver  of  the  tolls,  rates,  duties  and  other  property  of  a 
railway,  upon  the  application  of  a  mortgagee,  that  the  court 
can  not  prescribe  everything  which  is  necessary  to  be  done 
for  the  proper  management  of  the  affairs  of  the  corpora- 
found  in  the  fact  that  the  com-  Benedict  v.  St.  J.  &  W.  R.  Co., 
pany  was  actually  insolvent,  that  19  Fed.  Rep.,  173. 
the  contractor  for  building  the  2  Hopkins  v.  Worcester  &  Birm- 
road  had  failed  and  abandoned  his  ingham  Canal  Proprietors,  L.  R.,  6 
contract,  and  that  the  charter  and  Eq.,  437;  De  Winton  v.  Mayor  of 
a  valuable  land  grant  were  about  Brecon,  26  Beav.,  533. 
to  lapse  by  the  non-completion  of  3  Hopkins  v,  Worcester  &  Birm- 
a  small  remaining  portion  of  the  ingham  Canal  Proprietors,  L.  R.,  6 
road  within  the  time  required  by    Eq.,  437. 

law.  4  De  Winton  v.  Mayor  of  Brecon, 

26  Beav.,  533. 


CHAP.  XI.]  RAILWAYS.  315 

tion,  and  that  it  is  liable  to  indictment  in  case  the  receiver 
does  not  perform  the  duties  required  of  the  company  by  its 
act  of  incorporation.1 

§381.  It  is  held,  in  the  Irish  .Chancery,  that  railway 
bondholders  are  entitled  to  a  receiver  over  the  tolls  and 
traffic  of  the  road,  when  their  bonds  are  an  equitable  charge 
upon  such  tolls,  and  when  the  inconvenience  of  proceeding 
at  law  for  the  enforcement  of  their  demands  is  so  great  as 
to  render  the  legal  remedy  practically  useless.  And  it  is 
not  necessary,  to  entitle  them  to  the  relief,  that  the  bond- 
holders should  have  first  recovered  judgment  at  law  and 
issued  execution,  when  the  right  to  be  paid  out  of  the  tolls 
is  attached  to  the  bonds  themselves,  and  a  receiver  pre- 
viously appointed  over  the  tolls  of  the  company  will  be 
extended  to  the  payment  of  the  demands  of  such  bondhold- 
ers.2 But  a  judgment  creditor  of  a  railway  company,  whose 
judgment  is  only  a  lien  or  charge  upon  its  lands,  to  the  ex- 
tent of  such  estate  or  interest  as  the  corporation  itself  has 
in  them,  is  not  entitled,  upon  obtaining  a  receiver  of  the 
railway,  to  be  paid  the  profits  received  by  the  receiver  in 
priority  to  interest  due  on  mortgages  of  the  Company  which 
antedate  his  judgment.3 

§  382.  The  jurisdiction  of  the  English  Court  of  Chancery, 
in  this  class  of  cases,  was  sometimes  invoked  when  there 
were  different  mortgagees  of  the  tolls,  who  were  entitled  to 
have  them  applied  for  the  payment  of  their  advances.  And 
when  the  trustees  of  an  incorporated  turnpike  company 
are  authorized  by  the  act  of  incorporation  to  mortgage  its 
tolls,  the  mortgagee  may  have  a  receiver  of  the  tolls  if 
there  are  other  mortgages  thereon,  and  he  will  not  be  re- 
quired to  take  proceedings  at  law  to  obtain  possession  under 
his  mortgage.  Indeed,  such  a  case  would  seem  to  be  a 
stronger  one  for  the  interposition  of  equity  by  a  receiver 

iFripp  v.  The  Chard  R.  Co.,  11  ciation  v.  Newry  &  Armagh  R.  Co. , 

Hare,  241;   S.  C,  17  Jur.,  887;  S.  Ir.  Rep.,  2  Eq.,  1. 

C,  22  L.  J.,  N.  S.,  1084.  » Holland  v.  Cork  &  Kinsale  R. 

2  Imperial  Mercantile  Credit  Asso-  Co.,  Ir.  Rep.,  2  Eq.,  417. 


316  KECEIVEKS.  [CHAP.  XI. 

than  the  case  of  an  ordinary  mortgage  of  lands.1  And 
when  a  railway  company,  incorporated  by  act  of  parliament, 
is  authorized  to  obtain  loans  by  mortgaging  its  rates,  tolls, 
duties  and  other  property,  a  second  mortgagee,  who  has  ad- 
vanced money  to  the  company  upon  this  security,  is  enti- 
tled to  a  receiver  in  an  action  to  establish  his  mortgage, 
when  it  is  shown  that  the  property  is  unproductive  as  to  the 
second  mortgagees,  and  their  interest  has  been  unpaid  for  a 
series  of  years.  And  the  relief  may  be  allowed  in  such  a 
case,  even  though,  by  the  act  of  incorporation,  special  pro- 
vision is  made  for  the  appointment  of  a  receiver  in  behalf 
of  a  mortgagee  on  application  to  justices  of  the  peace  for 
that  purpose,  the  act  providing  that  this  special  remedy 
shall  be  without  prejudice  to  any  remedies,  either  at  law  or 
in  equity,  which  the  mortgagee  may  have.  In  such  a  case, 
it  constitutes  no  sufficient  objection  to  granting  the  relief 
sought  that  the  mortgagee  has  not  joined  as  defendants  to 
the  action  other  mortgagees  secured  by  the  same  mortgage 
with  himself.2 

§  383.  As  between  different  mortgage  creditors  of  a  rail- 
way company,  whose  mortgages  are  a  charge  upon  the 
property  of  the  company,  to  be  paid  pari  passu,  and  with- 
out priority  or  preference,  equity  will  not  permit  one  of  the 
mortgagees  to  obtain  a  preference  over  others.     And  where 

i  Crewe  v.  Edleston,  1  De  G.  &  would    entitle    him,    immediately 

J.,  93.     "  It  is  to  be  observed,  too,"  upon  possession  taken,  to  come  to 

says  Lord  Justice  Turner,  p.  109,  this  court  to  have  it  ascertained 

"  that  the  rights  under  a  mortgage  what  is  due  upon  the  other  mort- 

of  this  description  differ  materially  gages,  and  for  a  receiver  to  aid  him 

from  the  rights  under  an  ordinary  in  the  due  application  of  the  tolls, 

mortgage  of  land.     Under  an  ordi-  and  if  this  court  can  be  called  upon 

nary     mortgage    the    mortgagee,  to  appoint  a  receiver  immediately 

when  he    enters    into    possession,  after  the  possession  recovered  at 

holds  for  his  own  benefit.     Under  law,  it  can  hardly  be  necessary  that 

a  mortgage  of  this  description  he  the  proceedings  at  law  should  first 

becomes,  when  he  enters  into  pos-  betaken." 

session,  liable  to  the  other  mort-  -Fripp  v.  The  Chard  R.  Co.,  11 

gagees,  to  the  extent  of  then  inter-  Hare,  241;  S.  C,  17  Jur.,  887;  22 

ests.    This  liability,  I  apprehend,  L.  J.,  N.  S.,  1084. 


CHAP.  XI.]  RAILWAYS.  317 

some  of  the  mortgagees  have  filed  a  bill  for  an  account  of 
the  principal  and  interest  due  upon  their  mortgages,  and 
have  obtained  a  receiver  of  the  railway  and  its  tolls,  the 
court  will  not  allow  another  of  the  mortgagees,  who  has 
obtained  judgment  upon  his  demand,  to  issue  execution 
against  the  property  of  the  company,  otherwise  than  as 
trustee  for  himself  and  all  other  mortgage  creditors  of  the 
company.  But  the  court  may,  in  such  case,  direct  an  in- 
quiry as  to  whether  it  will  be  for  the  benefit  of  the  mortgage 
creditors  generally  that  any  proceedings  should  be  taken 
for  the  purpose  of  making  the  judgment  available  for  their 
benefit.1 

§  384.  Where  a  railway  company,  chartered  by  two  dif- 
ferent states,  and  whose  line  of  road  lies  in  both  of  the  states, 
executes  a  mortgage  of  the  entire  line  of  its  road  to  one  of 
the  states  to  secure  the  payment  of  an  annuity  due  from  the 
company,  and  the  state  occupies  the  relation  of  a  second 
and  third  incumbrancer,  it  is  entitled  to  the  aid  of  a  receiver, 
upon  a  bill  showing  that  the  tolls  and  revenues  of  the  road 
are  being  diverted  to  the  payment  of  junior  obligations  and 
liens,  in  violation  of  the  duty  incumbent  upon  the  corpora- 
tion. And  although  the  courts  of  the  state  in  which  the  re- 
lief is  granted  have  jurisdiction  of  the  matter  only  within 
the  limits  of  that  state,  they  will  yet  interfere  to  the  extent 
of  their  jurisdiction ;  and  the  fact  that  their  authority  does 
not  extend  beyond  the  territorial  limits  of  the  state  will  not 
deter  them  from  acting,  in  a  proper  case,  to  the  extent  of 
such  limits.  In  such  a  case,  the  defendant,  as  to  that  por- 
tion of  its  property  and  franchises  within  the  limits  of  the 
state  where  the  relief  is  sought,  will  be  treated  as  a  domes- 
tic corporation  and  will  be  dealt  with  accordingly.2 

§  385.  When  a  mortgagee  of  the  tolls  of  a  turnpike 
company,  under  an  act  of  parliament  providing  that  none  of 
the  mortgagees  of  such  tolls  should  have  preference  over  oth- 
ers, had  taken  possession  of  the  turnpike  gates  without  any 

'Bowen  v.  Brecon  R.  Co.,  L.  R.,  2  State  of  Maryland  v.  Northern 
3  Eq.,  541.  Central  R.  Co.,  18  Md.,  193. 


318  RECEIVERS.  [CHAP.  XI. 

legal  proceedings,  and  was  in  receipt  of  the  tolls  and  re- 
tained the  entire  amount  in  discharge  of  his  own  demand, 
instead  of  applying  it  for  the  benefit  of  all  the  mortgagees 
pari  passu,  as  required  by  the  act  of  parliament,  an  injunc- 
tion was  granted  against  him  and  a  receiver  of  the  tolls 
was  appointed,  upon  the  application  of  another  mortgagee.1 

§  386.  When  a  railway  company  is  endowed  with  a  valu- 
able land  grant,  which  constitutes  the  principal  security  of 
its  bondholders,  and  there  is  danger  of  the  grant  lapsing  be- 
fore the  completion  of  the  road,  which  is  required  to  be 
completed  within  a  specified  time,  a  receiver  may  be  ap- 
pointed on  application  of  the  bondholders,  the  exigencies  of 
the  case  being  regarded  as  sufficient  to  warrant  a  court  of 
equity  in  interfering.  And  such  receiver  may  be  authorized 
to  borrow  money  sufficient  to  complete  the  line  within  the 
time  specified,  and  to  issue  his  obligations  for  that  purpose, 
which  may  be  made  a  lien  upon  the  road.2 

§  387.  In  an  action  for  the  foreclosure  of  a  mortgage 
given  by  a  railway  company  to  secure  its  bonds,  it  affords 
no  sufficient  objection  to  appointing  a  receiver  in  behalf  of 
the  bondholders,  that  the  proceedings  of  the  corporation  in 
issuing  the  bonds  and  mortgage  are  impeached  by  mere 
negative  testimony,  as  by  an  affidavit  of  the  secretary  of 
the  company  stating  that  he  is  not  able  to  find  any  rec- 
ord of  authority,  given  by  the  stockholders  to  the  directors 
or  officers  of  the  company,  to  execute  the  bonds  and  mort- 
gage in  question.  Since,  upon  a  preliminary  application 
for  the  appointment  of  a  receiver,  the  court  will  not  pass 
upon  or  determine  the  validity  of  the  bonds,  but  will  leave 
that  question  to  the  final  hearing.3 

§  388.  Questions  of  difficulty  have  occurred  in  deter- 
mining the  relative  jurisdiction  of  the  state  and  federal 

1  Dumville  v.  Ashbrooke,  3  Russ.,  receiver  under  such  circumstances. 
99  note  c.  See,  also,  S.  C,  5  Dill.,  519. 

2  Kennedy  v.  St.  Paul  &  Pacific  3  Keep  v.  Michigan  Lake  Shore  R. 
R.  Co.,  2  Dill.,  448.  And  see  this  Co.,  U.  S.  Circuit  Court,  Western 
case  for  form  of  order  appointing  a  District    of   Michigan,  6    Chicago 

Legal  News,  101. 


CHAP.  XI.]  EAILWAYS.  319 

courts,  upon  applications  for  receivers  in  aid  of  the  foreclos- 
ure of  railway  mortgages.  The  true  rule  upon  this  subject 
undoubtedly  is,  that  the  court  first  acquiring  jurisdiction  of 
the  subject-matter,  or  of  the  res,  will  retain  jurisdiction  to 
the  end  of  the  litigation,  and  will,  if  necessary,  take  posses- 
sion or  control  of  the  property  by  a  receiver,  to  the  exclu- 
sion of  all  interference  from  other  courts  of  concurrent 
jurisdiction.1  Accordingly,  when  a  trustee  in  a  deed  of 
trust,  given  by  a  railway  company  to  secure  its  bonds,  files 
his  bill  in  the  United  States  court  for  a  foreclosure,  which 
thus  obtains  jurisdiction  of  the  subject-matter,  and  pending 
this  action,  and  without  leave  of  the  federal  court,  the  trustee 
institutes  proceedings  in  a  state  court  to  foreclose  the  same 
trust  deed,  upon  which  a  receiver  is  appointed,  a  foreclosure 
ordered  and  the  property  sold,  the  United  States  court 
retains  its  jurisdiction.  It  may,  therefore,  upon  a  proper 
showing  of  the  necessity  for  a  receiver,  make  such  appoint- 
ment on  the  application  of  one  of  the  bondholders  secured 
by  the  mortgage,  and  the  interference  of  the  state  court 
will  be  treated  as  unauthorized,  and  as  not  affecting-  the 
previously   acquired  jurisdiction  of  the   federal  tribunal.2 

'Bill  v.  New  Albany  R.  Co.,  2  rights  which  had  been  partially  ad- 

Biss.,  390;  Union  Trust  Co.  v.  The  judicated,  thus  ignoring  everything 

Rockford,  Rock  Island  &  St.  Louis  that  occurred  here.     It  is  true  that 

R.  Co.,  U.  S.  Circuit  Court,  North-  they  seem  to  have  had  the  opinion 

ern  District  of  Illinois,  7  Chicago  of  a  state  court  to  justify  their  ac- 

Legal  News,  33.     See,  also,  to  the  tion,  but  as  this  court  was  the  one 

same  effect,  Gaylord  v.  The  Fort  in  which  the  controversy  was  orig- 

Wayne,   Muncie  &  Cincinnati  R.  inally  commenced,  and  in  which, 

Co.,  U.  S.  Circuit  Court,  District  of  for  certain  purposes,   it  was    yet 

Indiana,  decided  by  Drummond,  J.,  pending,   it    is  the    only  tribunal 

1875,  unreported.  whose  decision  was  binding  upon 

-Bill  v.  New  Albany  R.  Co.,  2  the  parties  in  this  court.     Before 

Biss.,  390.     The  principles  govern-  he  adopted  so  grave   a  measure, 

ing  in  such  case  are  well  stated  by  therefore,  and   one  calculated  so 

Drummond,  J.,  p.  400,  as  follows:  much  to  complicate  and  embarrass 

"  It  could  hardly  be  said  then  to  be  matters  in  dispute,  he  should  have 

fair  dealing,   while  the  case  was  come  to  this  court  for  directions 

thus  proceeding  here,  for  the  trustee  and  relief.     One  litigation  should 

and  some  of  the  bondholders  to  have  been  disposed  of  before  an- 

turn  over  to  another  jurisdiction  other  on  the  same  subject-matter 


320 


RECEIVERS. 


[CHAP.  XI. 


Xor  is  it  necessary,  in  the  application  of  the  general  rule  as 
above  stated,  that  the  court  which  first  acquires  jurisdiction 
of  the  case  shall  also  first  take  by  its  officers  possession  of 
the  property  in  controversy,  since  this  would  only  lead  to 
unseemly  haste  on  the  part  of  receivers  to  reduce  the  prop- 
erty to  manual  possession ;  and  while  the  court  first  appealed 
to  was  investigating  the  rights  of  the  respective  parties,  an- 
other court,  acting  with  greater  haste,  might,  by  seizing  the 
property,  render  the  first  suit  wholly  unavailing.  And 
where  a  bill  in  the  United  States  court,  in  behalf  of  holders 
of  railway  bonds,  seeking  the  aid  of  a  receiver  for  the  pro- 
tection of  their  security,  was  dismissed  upon  demurrer,  but 
afterward,  and  at  the  same  term,  this  judgment  was  set 


was  begun.  The  fact  appears  to  be, 
that  the  trustee  and  the  first  bond- 
holders thought  that  the  last  bond- 
holders had  ceased  to  have  any 
interest  in  the  road,  because  of  the 
inadequacy  of  the  property  to  re- 
spond to  inferior  hens,  aud  acted 
accordingly  —  a  conclusion  which 
could  only  be  reached  under  the 
authority  of  this  court.  Inasmuch, 
therefore,  as  the  case  was  still  here, 
as  for  certain  purposes  the  property 
was  subject  to  the  control  of  the 
court,  in  the  interests  of  the  parties 
before  it,  to  appeal  to  another  court 
to  foreclose  the  mortgages  and  sell 
the  road  was  unwarranted,  and  not 
consistent  with  the  obligations  due 
to  all.  The  trustee  was  responsible 
just  as  much  to  others  as  he  was  to 
those  who  demanded  he  should 
foreclose,  and  whose  instructions 
lie  obeyed.  If,  then,  it  was  a  breach 
of  duty  for  Williamson  to  proceed 
in  the  court  of  common  pleas  of 
White  county,  as  I  think  it  was, 
what  is  the  effect  upon  the  right  of 
tins  court  to  retain  jurisdiction  of 
the  cause  and  of  the  subject-matter? 
There  can  be  no  doubt  it  has  cre- 


ated great  confusion  in  the  position 
of  those  claiming  under  the  mort- 
gages, and  embarrassment  in  the 
court  to  deal  properly  with  their 
interests.  It  has  thus  brought 
about  an  apparent  conflict  between 
courts,  state  and  federal,  which 
should  always  be  avoided.  But  the 
conflict  arises  from  acts  done  after 
this  court  had  obtained  jurisdiction 
of  the  cause,  and  for  which,  there- 
fore, it  can  not  be  justly  held  ac- 
countable; and  when  a  party 
affected  by  an  order  or  decree  en- 
tered in  a  pending  cause  asks  for 
relief,  it  is  no  answer  to  say  that 
another  jurisdiction  lias  attempted 
to  seize  the  property,  and  thus 
place  it  beyond  the  power  of  the 
court  to  give  relief.  The  question 
always  must  be,  is  it  competent  for 
the  court  to  act?  If  so,  its  duty  is 
plain,  and  it  necessarily  follows 
from  what  has  been  said,  that,  in 
rriy  opinion,  the  property  is  still 
within  the  control  of  tins  court  to 
adjudicate  upon  the  equitable 
rights  of  all  who  have  ever  been 
before  it." 


Cn AT.  XI.]  RAILWAYS.  321 

aside  and  the  bill  reinstated,  and  plaintiffs  were  allowed  to 
amend,  a  receiver  was  appointed  to  take  charge  of  the  rail- 
way for  the  protection  of  the  bondholders,  notwithstanding 
another  creditor  of  the  company,  in  the  interval  between 
the  dismissal  of  the  bill  and  its  reinstatement  in  the  federal 
court,  had  filed  a  bill  in  the  state  court  and  procured  a 
receiver  thereon.1 

§  388  a.  "When  two  different  railways,  incorporated  in 
different  states,  have  been  legally  consolidated  into  one 
corporation,  which  is  operating  the  road  as  an  entire  and 
indivisible  property  through  both  such  states,  having  mort- 
gaged its  entire  line  thus  consolidated,  a  federal  court  in  one 
of  the  states  may  appoint  a  receiver  over  the  entire  prop- 
erty. And  in  such  case,  the  trustees  being  authorized  by 
the  mortgage  to  take  possession  of  and  to  operate  the  road 
upon  default,  and  having  refused  so  to  do  after  request  by 
the  bondholders,  the  relief  may  be  granted  upon  a  bill  by  the 
bondholders  to*  enforce  the  trust  and  to  foreclose  the  mort- 
gage.2 

§  388  b.  "When  in  an  action  brought  for  the  foreclosure  of 
a  railway  mortgage,  and  seeking  the  appointment  of  a  re- 
ceiver, an  order  is  made  authorizing  the  president  and 
directors  of  the  company  to  continue  in  the  possession  and 
management  of  the  road,  under  and  subject  to  the  orders  of 
the  court,  to  which  they  are  required  to  report  from  time  to 
time  the  condition  of  the  road  and  its  earnings  and  expenses, 
such  order  is  to  be  construed  as  appointing  them  receivers 

1  Union  Trust    Co.   r.  Rockford,  property ;  and  that,  the  receiver  of 

Rock  Island   &  St.   Louis  R.  Co.,  the  state  court  having  taken  pos- 

U.  S.  Circuit  Court,  Northern  Dis-  session  before  the  appointment  of 

trict  of  Illinois,  7  Chicago    Legal  the  receiver  by  the  federal  court, 

News,  33.    But  see,  contra,  Wilmer  such  possession  would  not  be  dis- 

v.  A.  &  R.  A.  L.  R.  Co.,  2  Woods,  turbed  by  the  latter  court,  although 

409,  where  it  was  held  that  the  pri-  it  had  first  acquired  jurisdiction  by 

ority  of  jurisdiction  between  the  the  filing  of  the  bill  and  by  service 

federal  and  state  court  should  be  of  process. 

determined,  not  by  prior  jurisdic-        -  Wilmer  v.  A.  &  R.  A.  L.  R.  Co., 

tiou  of    the  person  or  service  of  2  Woods,  409. 
process,  but  by  prior  seizure  of  the 
21 


322  RECEIVERS.  [CHAP.  XI. 

of  the  property,  and  they  will  be  regarded  as  operating  the 
road  as  officers  of  the  court  and  not  of  the  railway  com- 
pany.1 

§  389.  When  a  receiver  is  appointed  upon  a  bill  to  fore- 
close a  mortgage  executed  by  a  railway  company  to  secure 
its  bonds,  the  right  to  a  discharge  of  the  receiver  and  a 
restoration  of  the  property,  upon  payment  of  the  mortgage 
indebtedness,  is  a  clear,  legal  right,  in  no  sense  discretionary 
with  the  court,  and  a  refusal  to  grant  such  right  is  judicial 
error.2 

1  In  re  Fifty-four  First  Mortgage  2  Milwaukee  &  Minnesota  R.  Co. 
Bonds,  15  S.  C,  304;  Ex  parte  v.  Soutter,  2  Wal.,  510.  See  S.  C, 
Brown,  15  S.  C,  518.  Woolworth's  C.  C,  49. 


CHAP.  XI.] 


RAILWAYS. 


S23 


III.  Functions  and  Duties  of  the  Receiver. 


390.     Receiver's  functions  and  duties  usually  fixed  by  order ;  when 

authorized  to  complete  road. 
390a.  Contracts  subject  to  control  of  court;  construction  of  rival  line. 
191.     To  payment  of  what  debts  earnings  applied. 

Discretion  allowed  as  to  expenditures ;  what  may  be  allowed  in 

receiver's  accounts. 
Injunction  against  diverting  earnings  or  divesting  receiver  of 

control. 
Rights  of  action  vested  in  receiver. 


392. 


393. 


394. 


§  390.  The  usual  practice  of  courts  of  equity,  in  appoint- 
ing receivers  over  railway  corporations,  is  to  prescribe  in 
the  order  of  appointment  the  functions  and  duties  of  the 
receiver,  which  may  be  modified  or  extended  from  time 
to  time  by  further  order  of  court,  as  the  exigencies  of  the 
case  may  require.  In  general,  these  duties  comprise  the 
operation  and  management  of  the  road,  the  payment  of  cur- 
rent expenses,  and  the  application  of  the  residue  of  the 
earnings  and  receipts  to  the  extinguishment  of  the  indebted- 
ness, to  secure  which  the  receiver  was  appointed.1     The 


1  Brown  v.  New  York  &  Erie 
Railroad,  19  How.  Pr.,  84;  Ken- 
nedy v,  St  Paul  &  Pacific  R.  Co., 
2  Dill.,  448;  Vermont  &  Canada  R, 
Co.  v.  Vermont  Central  R.  Co. 
46  Vt.  792.  See,  as  to  right  or 
power  of  the  receiver  of  a  railway 
company,  under  the  laws  of  New 
Jersey,  to  sell  the  property,  rights 
and  franchises  of  the  company, 
free  from  all  liens  and  incum- 
brances, Middleton  t\  New  Jersey 
West  Line  R.  Co,,  10  C.  E,  Green, 
306.  As  to  the  functions  and  lia- 
bilities of  statutory  receivers  of  rail- 
ways appointed  by  the  governor  of 
the  state  pursuant  to  statute,  in 
Tennessee,  see  State  v.  E.  &  K.  R. 
Co.,  6  Lea,  353;  State  v.  McM,  & 


M.  R,  Co.,  6  Lea,  369.  As  to  the 
effect  of  a  consent  decree  terminat- 
ing a  receivership  over  a  railway, 
the  receivers  still  continuing  in 
possession  of  and  operating  the 
road  as  managers,  see  Vermont  & 
Canada  R.  Co.  v.  Vermont  Central 
R.  Co.,  50  Vt,  500.  See,  also, 
Langdon  v.  Vermont  &  Canada  R, 
Co.,  53  Vt,  228;  S.  C„  54  Vt,  593. 
As  to  the  liability  of  such  man- 
agers to  an  accounting  in  a  subse- 
quent action  brought  by  mortgage 
bondholders  in  a  federal  court,  and 
as  to  the  effect  of  a  plea  to  such 
action  of  the  pendency  of  the 
former  proceedings  in  the  state 
court,  see  Andrews  v.  Smith,  5  Fed. 
Rep.,  833, 


zu 


RECEIVERS. 


[CHAP.  XI. 


receiver  is  seldom  authorized  to  enlarge  the  operations  of 
the  company,  or  to  extend  its  line  of  road,  his  functions 
being  usually  limited  to  the  management  of  the  property  in 
its  existing  condition  for  the  protection  of  creditors,  and 
subject  always  to  the  supervision  of  the  court.  And  the 
better  doctrine  undoubtedly  is,  that  the  power  of  the  court 
extends  only  to  the  custody  and  preservation  of  the  prop- 
erty, and  that  it  has  no  power  to  extend  or  to  complete  a 
railway  enterprise,  and  for  this  purpose  to  raise  money  by 
charging  the  railway  and  its  appurtenances  with  hens  which 
shall  supersede  prior  mortgages,  without  the  consent  of  the 
holders  of  such  mortgages.1  In  extreme  cases,  however, 
the  courts  have  authorized  the  extension  or  completion  of 
the  road  by  the  receiver,  when  necessary  to  its  successful 
maintenance  and  operation,2  or  to  prevent  the  forfeiture  of 
valuable  land  grants  and  franchises  which  would  result  from 
the  non-completion  of  the  road  within  the  time  fixed  by  law.3 


1  Meyer  v.  Johnston,  53  Ala.,  237. 
Manning,  J. ,  delivering  the  opinion 
of  the  court,  says,  p.  337 :  "  It  is  in 
the  exercise  of  the  judicial  function 
only  that  a  court  obtains  jurisdic- 
tion between  litigant  parties  of  the 
cause  in  which  it  is  authorized  to 
take  such  control  for  the  preserva- 
tion of  the  property  involved.  And 
we  are  not  aware  of  any  principle 
of  law  or  element  of  wise  policy 
which  would  justify  such  court, 
after  so  getting  possession,  in  lay- 
ing aside  its  judicial  character  and 
engaging,  however  hopeful  the 
scheme,  in  the  completion  of  un- 
finished undertakings,  and  in  rais- 
ing money  for  this  purpose,  as  the 
parties  themselves  could  not, 
namely,  by  setting  up  liens  which 
shall  displace  other  and  older  liens, 
without  the  consent  of  the  persons 
to  whom  they  belong.  .  .  If, 
therefore,  the  action  of  the  chan- 
cellor, in  this  case,  goes  to  the  ex- 


tent of  taking  the  property  of  the 
defendant  corporation  in  its  hands 
for  the  purpose,  through  its  ap- 
pointees, of  completing  an  unfin- 
ished work,  or  of  enlarging  or 
improving  a  finished  one,  beyond 
what  is  necessary  for  its  preserva- 
tion, and,  to  that  end,  of  raising 
money  by  charging  the  railway 
and  its  appurtenances  with  hens 
which  are  to  supersede  older  ones, 
without  the  consent  of  the  holders 
of  these,  he  has  inadvertently 
passed  beyond  the  boundaries  of  a 
chancellor's  jurisdiction.  In  our 
opinion,  no  such  power  is  vested 
or  resides  in  any  judicial  tribunal." 

2  Miltenberger  v.  Logansport  E. 
Co.,  106  IT.  S.,  286;  Bank  of  Mon- 
treal v.  C.  C.  &  W.  R.  Co.,  48  Iowa, 
578. 

3  Kennedy  v.  St.  Paul  &  Pacific 
R.  Co.,  2  Dill.,  448;  S.  C.,  5  Dill., 
519.  Dillon,  J.,  says,  5  Dill.,  p. 
525:  "  I  assent  in  the  fullest  man- 


CHAP.  XI.] 


RAILWAYS. 


325 


And  in  such  cases,  the  receivers  have  been  authorized  to  issue 
debentures  or  certificates,  to  meet  the  expenses  of  construc- 
tion, which  were  made  a  first  lien  upon  the  railway.1  In 
general,  however,  the  courts  look  with  extreme  jealousy 
upon  any  proposition  for  the  extension  of  railway  projects 
by  their  receivers,  and,  ordinarily,  before  such  an  expendi- 
ture is  authorized  by  the  court,  there  should  be  a  reference 
to  a  master  to  determine  the  necessity  for  the  contemplated 
improvement.2 

§  390  a.  A  receiver  of  a  railway  has  no  power,  without 
the  sanction  of  the  court,  to  make  contracts,  as  for  the  pur- 
chase of  materials,  which  will  bind  the  estate  or  fund  which 
he  represents.  All  contracts  made  by  him  are  subject  to 
the  control  of  the  court,  which  may  modify  or  disregard 
them,  as  it  sees  fit ;  and  persons  contracting  with  him  are 
chargeable  with  knowledge  of  his  limited  powers  in  this 
regard,  and  deal  with  him  at  the  risk  of  their  contracts  not 
being  approved  by  the  court.3    Nor  is  it  his  duty  to  inter- 


ner  to  the  proposition  that  a  court 
of  equity  ought  not  to  enter  upon 
the  work  cf  either  operating  or 
building  a  railway,  if  this  can  pos- 
sibly be  avoided  without  the  cer- 
tain and  great  sacrifice  of  the 
rights  and  securities  of  the  parties 
in  interest.  The  original  order  in 
this  case  was  made  upon  this  prin- 
ciple, and  upon  the  exceptional 
ease  which  the  record  presented 
(Kennedy  v.  St.  Paul  &  Pacific 
Railroad  Co.,  2  Dill.,  448).  It  is 
not  to  be  inferred  from  the  report 
of  that  case  that  authority  even  to 
complete  the  building  of  an  unfin- 
ished line  of  railway,  and  to  issue 
debentures  for  that  purpose,  is  to 
be  conferred  without  an  over- 
whelming and  irresistible  neces- 
sity. When  such  authority  is 
conferred  it  ought  to  be  guarded 
with  the  utmost  care."    And  see 


the  form  of  order  in  this  case,  2 
Dill.,  448;  5  Dill.,  527,  and  the  sub- 
sequent proceedings  in  the  case, 
5  Dill.,  530.  As  to  the  power  of 
receivers  of  an  insolvent  railway 
in  New  York,  to  complete  the  con- 
struction of  the  road,  and  as  to  the 
right  of  abutting  property  owners 
to  enjoin  such  construction  when 
their  damages  have  not  been  paid, 
see  Moran  v.  Schaeffer,  27  Hun, 
582. 

1  See  cases  cited  supra. 

2 Hand  v.  Railroad  Co.,  10  S.  C, 
406. 

3  Lehigh  C.  &  N.  Co.  v.  Central 
R.  Co.,  35  N.  J.  Eq.,  426.  And  it  is 
also  held  in  New  Jersey,  that  when 
two  insolvent  railway  companies 
are  in  the  hands  of  receivers  ap- 
pointed by  the  same  court,  the  court 
may,  upon  the  application  of  either 
receiver,  modify  a  contract  made 


326  RECEIVERS.  [CHAP.  XI. 

fere  with  or  to  prevent  the  construction  of  a  rival  line  of 
railway,  even  though  such  construction  might  result  in  di- 
minishing the  earnings  of  the  road  under  his  control.  He 
can  not,  therefore,  be  allowed  credit  in  his  accounts  for 
money  expended  in  endeavoring  to  defeat  a  subsidy  in  aid 
of  the  construction  of  a  parallel  road.1 

§  391.  Where,  upon  a  bill  filed  by  bondholders  for  the 
foreclosure  of  a  railway  mortgage  securing  their  bonds,  re- 
ceivers of  the  railroad  are  appointed  pendente  lite,  and  hold 
the  property  of  the  road  only  provisionally  and  until  the 
ultimate  determination  of  the  cause,  they  are  not  authorized 
to  appropriate  the  property  and  assets  of  the  corporation 
and  its  earnings  to  the  payment  of  debts  of  the  company 
previously  incurred  by  contract.  The  contract  obligation, 
although  binding  upon  the  railway  company,  does  not 
constitute  a  hen  upon  its  property  or  franchises,  and  the  ap- 
propriation by  the  receivers  of  funds  of  the  company  to  the 
payment  of  such  an  obligation  would  be,  in  effect,  to  give 
a  preference  to  such  indebtedness,  and  would  be  inconsistent 
with  the  purposes  for  which  the  receivers  were  appointed.2 

by  the  companies  before  their  in-  and  the  conduct  of  its  business,  be- 

solvency  for  the  use  by  one  com-  cause  this  is  essential  to  its  proper 

pany  of  the  tracks  and  terminal  preservation.    They  may  fulfill  the 

facilities  of  the  other.     In  re  N.  J.  contracts  of  the  corporation  so  far 

&  N.  Y.  R.  Co.,  29  N.  J.  Eq.,  67.  as  beneficial.     They  will  not  pay 

But  the  exercise  of  such  power  may  its  debts,  nor  fulfill  contracts  which 

well  be  challenged  as  impairing  the  are  burdensome  or  tend  to  diminish 

obligation  of  the  contract.     As  to  the  value  of  the  property  in  their 

the  extent  to  which  covenants  of  control,  unless  such  contracts  are 

the  receiver  are  binding  upon  sub-  charged  as  incumbrances  upon  the 

sequent  purchasers  of  the  railway,  property,   or  are  necessary  to  its 

see  Martin  v.  N.  Y.,  S.  &  W.  R.  proper  preservation  and  security. 

Co.,  36  N.  J.  Eq.,  109.  They  are  entitled  to  repayment  of 

iCowdrey  v.  G.,  H.  &  H.  R.  Co.,  their     reasonable    expenses     and 

93  U.  S.,  352.  charges,  in  preference  to  all  other 

-'  Ellis  v.  Boston,  Hartford  &  Erie  claims  upon  the  property  of  what- 

R.  Co.,  107  Mass.,  1.     And  in  this  ever  nature."    See,  also,  Brockle- 

case  it  is  said  by  the  court,  Wells,  bank  v.  East  London  Railway,  12 

J.,   p.  28:    "They  (the  receivers)  Ch.  D.,  839. 
continue  the  operation  of  the  road 


CHAP.  XI.]  RAILWAYS.  327 

So  where  the  mortgage  bondholders  of  a  railroad  have  ob- 
tained a  receiver,  in  an  action  for  the  foreclosure  of  their 
mortgages,  and  by  his  order  of  appointment,  the  receiver 
is  authorized  to  pay  the  amounts  due  and  maturing  for  ma- 
terials and  supplies  about  the  operation  and  for  the  use  of 
the  road,  the  court  will  incline  to  limit  the  construction  of 
the  order  to  the  payment  of  such  obligations  as  are  neces- 
sary to  keep  the  road  in  running  order,  and  will  not,  there- 
fore, extend  it  so  far  as  to  direct  the  receiver  to  pay  old 
obligations  incurred  several  years  previously,  such  demands 
being  regarded  as  secondary  to  the  rights  of  the  mort- 
gagees.1 

§  392.  The  duties  of  the  receiver  of  a  railway,  entrusted 
with  the  management  and  operation  of  the  road,  being 
very  different  from  and  far  more  responsible  than  those  of 
a  passive  receiver,  appointed  merely  to  collect  and  hold 
money,  a  somewhat  wider  discretion  is  allowed  him  in  the 
matter  of  expenditures  necessary  to  operate  the  road.  And 
it  may  be  said  in  general,  that  all  outlays  made  by  him  in 
good  faith,  in  the  ordinary  course  of  the  business  of  the 
road,  with  a  view  to  advance  and  promote  its  interests,  and 
to  render  it  profitable  and  successful,  may  be  allowed  him 
in  passing  his  accounts.  Such  outlays  may  include  not  only 
keeping  the  road  and  its  buildings  and  rolling  stock  in  re- 
pair, but  also  providing  such  additional  accommodations 
and  stock  as  the  necessities  of  the  business  may  demand, 
always  referring  to  the  court  or  master  for  advice  and  author- 
ity when  any  considerable  outlay  is  required.  Thus,  charges 
for  rebate  on  freight;  for  horses  and  wagons  for  the  deliv- 
ery of  freight ;  for  drayage  and  wharfage ;  for  the  purchase 
of  scales ;  for  office  room ;  for  advertising  the  accommoda- 
tions of  the  road ;  and  for  interest  paid  to  a  bank  for  loans 
of  money,  have  all  been  allowed.2    So  money  borrowed  b}' 

1  Brown  v.   New   York    &    Erie  down  as    a    general  proposition," 

Railroad,  19  How.  Pr.,  84.  says  Mr.   Justice  Bradley,  p.   336, 

-'Cowdrey  v.  The  Railroad  Co.,  1  "that  all  outlays  made  by  the  re- 
Woods,    331.     "  It    may    be    laid  ceiver  in  good  faith,  in  the  ordi- 


32S 


RECEIVERS. 


[CHAP.  XI. 


the  receiver  for  the  necessary  maintenance  and  operation 
of  the  road,  may  be  repaid  out  of  the  income  of  the  receiver- 
ship.1 And  rebates  upon  freight  allowed  by  the  receiver, 
which  are  not  inequitable  or  against  public  policy,  may  be 
allowed  and  paid  out  of  the  receiver's  earnings.2 

§  393.  It  is  the  clear  duty  of  the  court  appointing  a  re- 
ceiver over  a  railway  to  afford  him  all  necessary  protection 
in  the  performance  of  his  official  duties.  And  where  the 
order  of  appointment  directs  the  receiver  to  operate  and 
manage  the  road,  subject  to  the  decrees  and  orders  made  in 
the  cause,  and  subject  to  the  further  direction  of  the  court, 
since  the  successful  management  of  the  road  depends  upon 
the  control  of  the  receiver  over  its  income  and  earnings, 
any  attempt  by  other  parties  to  divert  such  earnings,  or  to 
divest  the  receiver  of  his  control  over  them,  will  be  enjoined 
b}r  the  court,  when  the  parties  making  such  attempt  are 
within  its  jurisdiction,  even  though  they  are  proceeding  to 


nary  course,  with  a  view  to  advance 
and  promote  the  business  of  the 
road,  and  to  render  it  profitable 
and  successful,  are  fairly  within 
the  line  of  discretion  which  is 
necessarily  allowed  to  a  receiver 
entrusted  with  the  management 
and  operation  of  a  railroad  in  his 
hands.  His  duties,  and  the  dis- 
cretion with  which  he  is  invested, 
are  very  different  from  those  of  a 
passive  receiver,  appointed  merely 
to  collect  and  hold  moneys  due  on 
prior  transactions,  or  rents  ac- 
cruing from  houses  and  lands. 
And  to  such  outlays  in  ordinary 
course  may  properly  be  referred, 
not  only  the  keeping  of  the  road, 
buildings  and  rolling  stock,  in  re- 
pair, but  also  the  providing  of  such 
additional  accommodations,  stock 
and  instrumentalities  as  the  neces- 
sities of  the .  business  may  require, 
always  referring  to  the  court,  or  to 


the  master  appointed  in  that  be- 
half, for  advice  and  authority  in 
any  matter  of  importance,  which 
may  involve  a  considerable  outlay 
of  money  in  lump.  And  except  in 
extraordinary  cases,  the  submission 
by  the  receiver  of  his  accounts  to 
the  master  at  frequent  intervals, 
whereby  the  latter  may  ascertain 
from  time  to  time  the  character  of 
the  expenditures  made,  and  dis- 
allow whatever  may  not  meet  his 
approval,  will  be  regarded  as  a  suf- 
ficient reference  to  the  court  for  its 
ratification  of  the  receiver's  pro- 
ceedings. In  extraordinary  cases, 
involving  a  large  outlay  of  money, 
the  receiver  should  always  apply  to 
the  court  in  advance,  and  obtain 
its  authority  for  the  purchase  or 
improvement  proposed." 

1  Ex    parte     Carolina    National 
Bank,  18  S.  C,  289. 

2  Ex  parte  Benson,  18  S.  C,  38. 


CHAP.  XI. j  EAILWAYS.  329 

divert  the  earnings  from  the  receiver's  control  by  suit  in 
another  state.  In  such  a  case,  the  court,  in  the  protection  of 
its  receiver,  does  not  operate  by  its  injunction  upon  the 
court  in  the  other  state  in  which  the  action  is  pending,  but 
only  operates  in  personam  upon  the  parties  within  its  own 
jurisdiction,  and  restrains  them  from  interfering  with  or 
diverting  the  income  and  funds  properly  belonging  to  the 
custodjr  of  the  receiver.1 

§  394.  As  regards  rights  of  action  vesting  in  a  receiver 
of  a  railway  corporation  by  virtue  of  his  appointment,  he 
must,  in  their  enforcement,  pursue  the  appropriate  remedies 
provided  by  law  for  that  purpose.  And  when  he  is  author- 
ized to  take  possession  of  the  bills,  bonds,  notes  and  other 
evidences  of  indebtedness  belonging  to  the  company,  with 
full  power  and  authority  to  sue  for  and  collect  all  money 
due  thereon,  if  he  seeks  to  enforce  payment  of  a  subscrip- 
tion due  from  a  subscriber  to  the  capital  stock  of  the  com- 
pany, he  must  bring  an  action  at  law,  the  right  being  of  a 
legal  nature,  and  he  will  not  be  allowed  to  maintain  a  bill 
in  equity.2  And  since  proceedings  for  the  foreclosure  of  a 
mortgage,  given  by  a  railway  company  to  secure  its  bonds, 
are  regarded  as  in  rem,  in  that  they  seek  to  reach  such 
property  of  the  corporation  as  was  mortgaged  to  secure  its 
bonds,  the  right  of  a  receiver  appointed  therein  extends 
only  to  the  specific  property  which  is  the  subject  of  the  liti- 
gation and  covered  by  the  mortgage,  being  necessarily  sub- 
ject to  the  same  limitations  as  the  right  of  the  bondholders 
themselves.  The  receiver,  therefore,  can  not  maintain  an 
action  against  the  superintendent  of  the  railway  company 
for  the  recovery  of  money  held  by  him,  which  had  accrued 
from  the  earnings  of  the  road  before  the  receiver  was  ap- 
pointed, where  the  mortgage  itself  did  not  attach  to  such 
earnings.3 

Vermont  &  Canada  R.  Co.  v.        2 Freeman  i\  Winchester,  18  Miss., 
Vermont  Central  R.  Co.,  46  Vt.,    577. 
792.  SNoyes  v.  Rich,  52  Me.,  115. 


330  RECEIVERS.  [CHAP.  XI. 


IV.  Preferred  Debts. 

§394a.  Unsecured  debts  preferred  to  mortgages;   indefensible  upon 

principle. 
394 b.  Receiver's  expenses  a  prior  charge;  extending  line ;  damages; 

rentals. 
394  c.  Diversion  of  current  income  ground  of  preference  to  current 

debts. 
394  d.  Preference  based  upon  necessity  of  preserving  property,  inde- 
pendent of  diversion. 
394 e.  Mortgagee  seeking  equitable  relief  must  submit  to  conditions; 

preference  to  assignee  of  debt. 
394/.  Rolling  stock ;  car-trust  leases ;  sale  of  rolling  stock  under  fore 

closure. 
394  g.  When  judgment  creditors  allowed  priority. 
394  h.  Claims  of  general  creditors  other  than  for  operating  expenses 

not  preferred. 
394  i.  Statutory  liens  preserved ;  when  interest  disallowed. 

§  39±a.  The  most  important  and  most  difficult  questions 
connected  with  railway  receiverships  are  those  which  per- 
tain to  indebtedness  incurred  in  the  management  and  oper- 
ation of  the  railway,  and  the  extent  to  which  certain  classes 
of  pre-existing  debts  may  be  preferred  in  payment,  either 
out  of  the  income  of  the  receivership,  or  out  of  the  pro- 
ceeds of  foreclosure,  as  against  the  claims  of  mortgage 
bondholders  and  other  creditors.  That  mere  contract  debts 
of  the  railway  company,  as  for  labor,  materials  and  sup- 
plies, incurred  prior  to  the  appointment  of  a  receiver,  and 
unsecured  by  any  lien  upon  the  property,  can,  through  the 
aid  of  a  court  of  equity,  be  given  priority  over  antecedent 
mortgages,  would  seem  to  be  a  proposition  wholly  inde- 
fensible upon  sound  legal  reasoning.  The  allowance  of  such 
preference  plainly  impairs  the  obligation  of  the  mortgage 
contract,  and  in  practice  frequently  absorbs  much  of  the 
mortgage  security.  Nevertheless  the  doctrine  of  the  courts 
upon  this  subject,  although  frequently  criticised  by  the  pro- 
fession and  in  vigorous  and  able  dissenting  opinions  from 
the  bench,  is  so  strongly  intrenched  in  authority  that  it  can 


CHAP;  XI.]  KAILWAYS.  331 

no  longer  be  questioned.  And  it  only  remains  to  consider 
what  may  now  be  regarded  as  well  established  rules  appli- 
cable to  this  class  of  questions,  with  the  reasoning  of  the 
courts  upon  which  such  rules  are  founded. 

§  394  h.  As  regards  indebtedness  incurred  by  the  re- 
ceiver himself  in  the  maintenance,  operation  and  necessary 
repairs  of  the  road  while  in  his  custody,  but  little  difficulty 
is  experienced  in  practice,  and  the  power  of  a  court  of  equity 
to  create  such  debts  through  its  receiver,  and  to  give  them 
preference  over  the  lien  of  the  mortgage  indebtedness,  is 
well  established.1  The  exercise  of  this  power  rests  upon  the 
obvious  principle,  that  the  court  having  undertaken  the 
management  of  the  railway  at  the  request  and  for  the  ben- 
efit of  the  mortgage  creditors,  all  necessary  expenses  in- 
curred in  such  management  are  a  prior  charge  upon  the 
fund  or  property,  and  constitute,  in  effect,  a  part  of  the  nec- 
essary costs  of  the  litigation.  It  is,  therefore,  customary  in 
the  order  appointing  the  receiver,  to  direct  him  to  pay,  out 
of  the  earnings  of  the  road,  all  necessary  expenses  of  man- 
agement and  operation.  Such  subsequent  orders  with  ref- 
erence to  this  class  of  debts  are  from  time  to  time  made 
during  the  progress  of  the  cause  as  the  exigencies  of  the 
case  may  require,  and  if  the  receiver's  income  proves  insuffi- 
cient to  satisfy  his  indebtedness,  the  residue  is  usually  paid 
out  of  the  proceeds  of  the  foreclosure  sale,  before  a  distri- 
bution is  made  to  the  mortgage  bondholders.  Nor  is  such 
expenditure  by  the  receiver  limited  to  the  actual  operation 
and  management  of  the  property ;  and  reasonable  expenses 
incurred  by  him  in  completing  the  road  for  operation,  thereby 
preserving  the  property  and  rendering  it  productive  for  the 
benefit  of  the  mortgage  bondholders,  have  been  allowed 
priority  over  other  claims  against  the  company,  including 
those  of  the  bondholders.2  And  when,  under  authority  of 
the  court,  the  receiver  has  constructed  a  branch  line  of  road 

'  Miltenberger  v.  Logansport  R.    road,  GO  N.  H.,  333.     See,  also,  Mil- 
Co.,  106  U.  S.,  286.  tenberger  v.  Logansport  R.  Co.,  106 
-Hale  v.  Nashua  &  Lowell  Rail-    U.  S.,  286. 


332  RECEIVERS.  [CHAP.  XI. 

out  of  the  income  of  the  receivership,  thereby  largely  in- 
creasing the  revenues  and  profits  of  the  road,  and  no  com- 
plaint is  made  by  the  parties  in  interest  until  more  than  two 
years  after  such  action,  the  court  will  not  entertain  objec- 
tions to  such  expenditure.1     So  damages  for  goods  lost  in 
transportation,  and  for  injury  to  property  while  the  road  is 
operated  by  the  receiver,  are  a  proper  charge  upon  his  earn- 
ings before  the  bondholders  are  entitled  to  share  therein.2 
So  rentals  due  for  a  line  of  road  operated  by  the  company 
under  lease,  the  operation  of  which  the  receiver  is  authorized 
to  continue  under  the  lease,  may  be  paid  out  of  the  re- 
ceiver's income.3    And  when  the  receiver  continues  to  use 
a  line  which  had  been  leased  to  the  company,  with  the  full 
knowledge  and  acquiescence  of  the  mortgage  bondholders, 
the  payment  of  a  fair  rental  for  the  use  of  such  line  and  for 
supplies  and  materials  in  its  operation  may  be  enforced  out 
of  the  proceeds  of  foreclosure,  prior  to  distribution  among 
the  bondholders.4     But  to  warrant  the  payment  of  the  re- 
ceiver's operating  expenses,  as  for  money  advanced,  supplies 
and  damages  incurred,  out  of  the  corpus  of  the  mortgaged 
property  in  preference  to   the  bondholders,  such  priority 
must  be  specially  authorized  by  the  court,  and  it  can  not  be 
allowed  merely  under  an  order  authorizing  him  to  pay  op- 
erating expenses  out  of  income.5 

iGibert  v.  W.  C,  V.  M.  &  G.  S.  which  the  value  of  the  extension 

R.  Co.,  33  Grat.,  586.     But  when  bears  to  the  value  of  the  entire 

the  receiver  is  authorized  by  the  road,  considered  with  reference  to 

court  to  construct    an  additional  the  purchase  money  of  the  whole, 

track  or  extension,  to  be  paid  for  Hand  v.  Savannah  &  Charleston  R. 

out  of  surplus  income,  the  order  re-  Co.,  17  S.  C,  219. 

serving  a  lien  upon  such  track  as  -Cowdrey  v.  G.,  H.  &  H.  R.  Co., 

security  for  the  persons  furnishing  93  U.  S.,  352. 

material  and  money  therefor,  and  3  Woodruff  v.  Erie  R.  Co.,  93  N. 

such  branch  is  afterward  sold  with  Y.,  609. 

the  road  as  an  entirety  in  the  fore-  4  Miltenberger  v.  Logansport  R. 

closure  proceedings,  claims  for  its  Co.,  106  U.  S.,  286. 

construction  will  not  be  paid  in  full  5  Hand  v.  Savannah  &  Charleston 

out  of  the  proceeds  of  sale,  but  will  R.  Co.,  17  S.  C,  219. 
be    prorated    in    the    proportion 


CHAP.  XI.]  RAILWAYS.  333 

§  394  c.  "With  regard  to  indebtedness  incurred  by  a  rail- 
way company  for  labor,  materials,  equipment  and  supplies 
before  the  appointment  of  a  receiver,  the  right  to  priority 
of  payment  out  of  the  income  of  the  receivership  has  fre- 
quently, although  not  always,  been  based  upon  a  diversion 
of  current  income  from  the  payment  of  current  indebted- 
ness. The  duty  of  the  railway  company  being  to  apply  its 
current  income  to  the  payment  of  obligations  incurred  in 
the  daily  operation  and  management  of  the  road,  before 
applying  such  income  for  the  benefit  of  mortgage  bond- 
holders, a  diversion  of  such  income,  as  by  payment  of 
bonded  indebtedness,  or  by  permanent  improvement  of  the 
property  for  the  benefit  of  the  bondholders,  will  justify  the 
court  in  restoring  to  such  unsecured  creditors  from  the  re- 
ceiver's income  what  has  been  improperly  diverted  by  the 
company  for  the  benefit  of  bondholders.  The  mortgagee, 
in  accepting  his  security,  is  regarded  as  having  impliedly 
agreed  that  the  current  debts  of  the  company  incurred  in 
the  ordinal  course  of  its  business  shall  be  paid  out  of  its 
receipts  before  he  has  any  claim  upon  the  income.  And 
the  court,  in  directing  such  payment  out  of  the  receiver's 
income,  only  does  in  effect  what  the  company  itself  should 
have  done  had  no  receiver  been  appointed.  Whenever, 
therefore,  the  current  income  of  the  road  has  been  diverted 
by  the  company  from  the  payment  of  debts  for  supplies, 
materials  and  labor,  and  has  been  appropriated  for  the  ben- 
efit of  mortgage  bondholders,  either  by  the  payment  of  in- 
terest or  by  the  permanent  betterment  of  the  property,  the 
labor  and  supply  creditors  may  be  allowed  priority  of  pay- 
ment out  of  the  receiver's  income.1     It  is  obvious  that  the 

1  Fosdick  v.  Schall,  99  U.  S.,  235;  although  what  is  there  said  upon 

Williamson's  Adm'r  v.  W.  C,  V.  the  question  of  diversion  is  obiter, 

M.  &  G.  S.  R.  Co.,  33  Grat.,  624.  the   opinion  of    the    court    seems 

Se  s,  also,  Burnham  v.  Bowen,  111  to  have  been  intended  to  establish 

U.  S.,  770 ;  Turner  v.  I.,  B.  &  W.  R.  the  rule  for  future  cases,  and  has 

Co.,  8  Biss.,  315.    Fosdick  v.  Schall,  so  been  generally  accepted.     Two 

99  U.  S.,  235,  is  regarded  as  the  questions    were    presented:     1st. 

leading  case  upon  the  subject,  and  whether  the  lien  of  railway  niort- 


334 


RECEIVERS. 


[CHAP.  XI. 


allowance  of  such  claims  does  not  rest  upon  any  lien  in  the 
technical  sense,  but  rather  upon  the  exercise  of  the  equita- 


gages  attached  to  after-acquired 
cars ;  and  2d,  whether  the  payment 
of  rentals  for  such  cars  during  the 
receivership,  and  for  six  months 
prior  thereto,  out  of  the  fund  in 
court,  it  not  appearing  that  there 
were  any  funds  except  those  result- 
ing from  the  foreclosure  sale,  was 
warranted.  From  the  case  as  re- 
ported, it  does  not  appear  that  in- 
come had  been  diverted,  either  by 
the  company  or  by  the  receiver, 
and  the  question  of  diversion  does 
not  appear  to  have  been  argued  by 
counsel.  Waite,  C.  J.,  says,  p. 
251:  "As  to  the  second  question, 
we  have  no  doubt  that  when  a 
court  of  chancery  is  asked  by  rail- 
road mortgagees  to  appoint  a  re- 
ceiver of  railroad  property  pending 
proceedings  for  foreclosure,  the 
court,  in  the  exercise  of  a  sound 
judicial  discretion,  may,  as  a  con- 
dition of  issuing  the  necessary 
order,  impose  such  terms  in  refer- 
ence to  the  payment  from  the  in- 
come during  the  receivership  of 
outstanding  debts  for  labor,  sup- 
plies, equipment  or  permanent  im- 
provement of  the  mortgaged  prop- 
erty, as  may,  under  the  circum- 
stances of  the  particular  case,  ap- 
pear to  be  reasonable.  .  .  The 
income  out  of  which  the  mortgagee 
is  to  be  paid  is  the  net  income  ob- 
tained by  deducting  from  the  gross 
earnings  what  is  required  for  nec- 
essary operating  and  managing  ex- 
penses, proper  equipment  and  use- 
ful improvements.  Every  railroad 
mortgagee,  in  accepting  his  secu- 
rity, impliedly  agrees  that  the  cur- 
rent debts  made  in  the  ordinary 


course  of  business  shall  be  paid 
from  the  current  receipts  before  he 
has  any  claim  upon  the  income.  If, 
for  the  convenience  of  the  moment, 
something  is  taken  from  what  may 
not  improperly  be  called  the  cur- 
rent debt  fund,  and  put  into  that 
which  belongs  to  the  mortgage 
creditors,  it  certainly  is  not  inequi- 
table for  the  court,  when  asked  by 
the  mortgagees  to  take  possession 
of  the  future  income  and  hold  it 
for  their  benefit,  to  require,  as  a 
condition  of  such  an  order,  that 
what  is  due  from  the  earnings  to  the 
current  debt  shall  be  paid  by  the 
court  from  the  future  current  re- 
ceipts before  anything  derived  from 
that  source  goes  to  the  mortgagees. 
In  this  way  the  court  will  only 
do  what,  if  a  receiver  should  not 
be  appointed,  the  company  ought 
itself  to  do.  .  .  We  think,  also, 
that,  if  no  such  order  is  made 
when  the  receiver  is  appointed, 
and  it  appears  in  the  progress  of 
the  cause  that  bonded  interest  has 
been  paid,  additional  equipment 
provided,  or  lasting  and  valuable 
improvements  made  out  of  earn- 
ings which  ought  in  equity  to 
have  been  employed  to  keep  down 
debts  for  labor,  supplies,  and  the 
like,  it  is  within  the  power  of  the 
court  to  use  the  income  of  the  re- 
ceivership to  discharge  obligations 
which,  but  for  the  diversion  of 
funds,  would  have  been  paid  in  the 
ordinary  course  of  business." 

It  has  generally  been  supposed 
that  Fosdick  v.  Schall  was  the  first 
reported  case  upon  the  question  of 
diversion  of  income  as  the  ground 


cnAF.  XI.] 


RAILWAYS. 


ble  powers  of  the  court  in  dealing  with  property  of  a  pecul- 
iar character,  and  under  circumstances  which,  until  recently, 
have  been  without  precedent  in  the  history  of  litigation.1 
Nor  is  it  necessary  that  the  diversion  of  income  should  have 
occurred  before  the  appointment  of  the  receiver ;  and  where, 
during  the  receivership,  current  income  is  applied  for  the 
benefit  of  the  mortgagees,  as  in  payment  for  additional 
grounds  and  rolling  stock  which  inure  to  their  benefit,  and 
wrhich  are  sold  as  a  part  of  the  mortgaged  property,  debts 
of  the  company  for  supplies  may  be  made  a  charge  upon 
the  property  acquired  under  the  foreclosure,  which  may  be 
sold  to  satisfy  such  indebtedness.2    But  the  allowance  of 


for  awarding  preference  to  labor 
and  supply  creditors.  But  the  doc- 
trine had  been  previously  recog- 
nized and  followed  in  some  of  the 
circuits,  and  it  is  plainly  indicated 
in  the  earlier  reported  opinion  of 
Drummond,  J.,  in  Turner  v.  I.,  B. 
&  W.  R.  Co.,  8  Biss.,  315.  Upon 
the  question  of  diversion  of  cur- 
rent income  by  the  receiver  to 
the  betterment  of  the  mortgaged 
property,  as  entitling  a  claimant 
for  personal  injuries  sustained 
while  the  road  was  operated  by  the 
receiver  to  payment  out  of  the  pro- 
ceeds of  such  property,  see  Ryan 
v.  Hays,  62  Tex.,  42. 

Opinion  of  Drummond,  J.,  in 
Turner  v.  I.,  B.  &  W.  R.  Co.,  8 
Biss.,  315. 

2  Union  Trust  Co.  v.  Souther,  107 
U.  S.,  591 ;  Burnham  v.  Bowen,  111 
U  S.,  776.  Waite,  C.  J.,  says,  p. 
782:  "But  it  is  further  insisted 
that,  even  though  the  court  did  err 
in  using  the  income  of  the  receiver- 
ship to  pay  the  fixed  prior  charges 
on  the  mortgaged  property,  and 
thus  increased  the  security  of  the 
bondholders,  there  is  no  power  now 
to  order  a  sale  of  the  property  in 


the  hands  of  the  trustees  to  pay 
back  what  has  thus  been  diverted. 
In  Fosdick  v.  Schall,  p.  245,  it  was 
said  that  if  in  a  decree  of  foreclos- 
ure a  sale  is  ordered  to  pay  the 
mortgage  debt,  provision  may  be 
made  for  a  restoration  from  the 
proceeds  of  the  sale  of  the  fund 
which  has  been  diverted,  and  this 
clearly  because,  in  equity,  the  diver- 
sion created  a  charge  on  the  prop- 
erty for  whose  benefit  it  had  been 
made.  Here  the  parties  interested 
preferred  a  decree  of  strict  fore- 
closure, which  the  court  gave,  but 
in  giving  it  saved  the  rights  of  all 
intervenors,  and  continued  the  case 
for  the  final  determination  of  all 
such  questions.  The  present  appeal 
is  from  a  decree  which  grew  out  of 
this  reservation.  As  the  diversion 
of  the  fund  created  in  equity  a 
charge  on  the  property  as  security 
for  its  restoration,  it  is  clear  that  if 
the  mortgagees  prefer  to  take  the 
property  under  a  decree  of  strict 
foreclosure,  they  take  it  subject  to 
the  charge  in  favor  of  the  current 
debt  creditor  whose  money  they 
have  got,  and  that  he  can  insist  on  a 
sale  of  the  property  tor  his  benefit, 


33G 


KECEIVEKS. 


[CHAP.  XI. 


sucli  current  debt  claims,  to  be  paid  out  of  net  income,  does 
not  necessarily  entitle  them  to  payment  out  of  the  corpus  of 
the  property,  and  such  preference  will  not  be  allowed  unless 
special  equities  are  shown  entitling  the  claimants  to  priority 
over  the  mortgage  indebtedness.1 

§  394  d.  The  right  to  priority  of  payment,  of  the  class 
of  claims  under  consideration,  has  been  recognized  and  the 
preference  allowed  independent  of  any  question  of  diversion 
of  income,  and  solely  upon  the  necessity  for  preserving  the 
property  and  continuing  its  operation.2  Thus,  the  receiver 
has  been  authorized  to  pay  arrears  due  for  operating  ex- 
penses for  a  period  of  ninety  days  prior  to  his  appointment, 


if  they  fail  to  make  the  payment 
without."  See,  also,  Langdon  v. 
Vermont  &  Canada  R.  Co.,  54  Vt., 
593,  to  the  point  that  debts  incurred 
by  managers  of  a  railway,  after 
their  discharge  as  receivers  proper, 
under  a  consent  decree,  constitute 
a  lien  upon  the  property  in  the 
nature  of  an  equitable  mortgage, 
which  may  be  enforced  by  strict 
foreclosure. 

>  Blair  v.  St.  L.,  H.  &  K.  R.  Co., 
23  Fed.  Rep.  ,471.  As  to  the  length 
of  time  prior  to  the  receivership 
within  which  current  debt  claims 
must  have  accrued  to  entitle  them 
to  priority  of  payment  out  of  the 
receiver's  income,  no  fixed  rule  has 
been  determined  by  the  courts,  and 
from  the  nature  of  the  case  none 
can  be.  In  the  United  States  cir- 
cuit court  for  the  seventh  circuit, 
the  time  has  frequently  been  fixed 
at  six  months,  and  this  has  been 
followed  in  other  circuits.  The 
only  known  reason  for  limiting  the 
time  to  six  months  in  the  seventh 
circuit  is  by  analogy  to  a  statute  of 
Illinois  giving  a  statutory  lien  upon 
railways  for  labor,  materials  and 


supplies  furnished,  provided  suit 
be  brought  within  six  months  after 
completion  of  the  contract.  See, 
upon  this  point,  opinion  of  Drum- 
mond,  J.,  in  Turner  v.  I.,  B.  &  W. 
R.  Co.,  8  Biss.,  315.  But  this  lim- 
itation has  not  been  generally 
adopted,  and  such  claims  have  been 
allowed  priority,  although  accruing 
one  or  more  years  before  the  re- 
ceivership. See  the  authorities  as 
to  time  reviewed  in  note  to  Blair  v. 
St.  L.,  H.  &  K.  R.  Co.,  22  Fed. 
Rep. ,  475.  See,  also,  Central  Trust 
Co.  v.  Texas  &  St.  Louis  Railway, 
22  Fed.  Rep.,  135.  As  to  the  ex- 
tent to  which  the  services  of  coun- 
sel necessary  to  the  management  of 
the  road  are  entitled  to  priority  out 
of  the  proceeds  of  foreclosure,  see 
Bayliss  v.  L.,  M.  &  B.  R.  Co.,  9 
Biss.,  90. 

2  Miltenberger  v.  Logansport  R. 
Co.,  106  U.  S.,  286 ;  Taylor  v.  P.  &  R. 
R.  Co.,  7  Fed.  Rep.,  377;  Atkins  v. 
Petersburg  R.  Co.,  3  Hughes,  307. 
See,  contra,  Denniston  v.  Chicago, 
Alton  &  St.  Louis  R.  Co.,  4  Biss., 
414. 


CHAP.  XI.] 


RAILWAYS. 


S37 


as  well  as  amounts  due  to  other  railway  companies  for  ma- 
terials and  repairs  and  for  ticket  and  freight  balances  before 
the  receivership.  And  these  allowances,  together  with  sums 
due  for  rolling  stock  purchased  by  the  receiver,  and  for 
completing  an  additional  line  and  bridge  as  part  of  the  main 
line  of  road,  have  been  given  priority  over  the  mortgage 
indebtedness,  to  be  paid  out  of  the  earnings  of  the  receiver, 
or,  if  necessary,  out  of  the  proceeds  of  foreclosure.1  So 
where  employees  of  the  company  were  threatening  to  strike 
because  of  non-payment  of  wages,  and  many  of  them  had 
brought  attachment  suits  and  recovered  judgments  against 
the  company,  advances  to  the  compan}^  to  pay  such  wages, 
with  an  agreement  for  repayment  out  of  the  first  net  earn- 
ings, have  been  allowed  priority  out  of  receiver's  income.2 


1  Miltenberger  v.  Logansport  R. 
Co.,  106  IT.  S.,  286.  Mr.  Justice 
Blatchford  says,  p.  311 :  "  Many  cir- 
cumstances may  exist  which  may 
make  it  necessary  and  indispensable 
to  the  business  of  the  road  and  the 
preservation  of  the  property,  for 
the  receiver  to  pay  pre-existing 
debts  of  certain  classes  out  of  the 
earnings  of  the  receivership,  or 
even  the  corpus  of  the  property, 
under  the  order  of  the  court,  with 
a  priority  of  lien.  Yet  the  discre- 
tion to  do  so  should  be  exercised 
with  very  great  care.  The  pay- 
ment of  such  debts  stands,  prima 
facie,  on  a  different  basis  from  the 
payment  of  claims  arising  under 
the  receivership,  while  it  may  be 
brought  within  the  principle  of  the 
latter  by  special  circumstances.  It 
is  easy  to  see  that  the  payment  of 
unpaid  debts  for  operating  ex- 
penses, accrued  within  ninety  days, 
due  by  a  railroad  company  sud- 
denly deprived  of  tbe  control  of 
its  property,  due  to  operatives  in 
its  employ,  whose  cessation  from 
22 


work  simultaneously  is  to  be  depre- 
cated in  the  interests  both  of  the 
property  and  of  the  public,  and  the 
payment  of  limited  amounts  due 
to  other  and  connecting  lines  of 
road  for  materials  and  repairs  and 
for  unpaid  ticket  and  freight  bal- 
ances, the  outcome  of  indispensa- 
ble business  relations,  where  a 
stoppage  of  the  continuance  of  such 
business  relations  would  be  a  prob- 
able result  in  case  of  non-payment, 
the  general  consequence  involving 
largely  also  the  interests  and  ac- 
commodation of  travel  and  traffic, 
may  well  place  such  payments  ha 
the  category  of  payments  to  pre- 
serve the  mortgaged  property  in  a 
large  sense,  by  maintaining  the 
good  will  and  integrity  of  the  en- 
terprise and  entitle  them  to  be 
made  a  first  lien."  To  the  same 
effect  see  Barton  v.  Barbour,  104 
U.  S.,  126. 

2 Atkins  v.  Petersburg  R.  Co.,  3 
Hughes,  307.  In  this  case,  the  ad- 
vances for  wages  were  made  nearly 
two  years  before  the  receivership. 


338  RECEIVERS.  [CHAP.  XI. 

So  claims  for  materials  and  supplies,  such  as  car  springs 
and  spirals  and  supplies  furnished  to  the  machinery  depart- 
ment, before  the  appointment  of  the  receiver,  and  used  by 
him  in  the  management  and  operation  of  the  road,  may  be 
paid  in  full  out  of  the  net  income  of  the  receivership  in 
preference  to  the  demands  of  mortgage  bondholders.  And 
the  net  earnings  of  a  railway,  while  in  the  hands  of  a  re- 
ceiver appointed  in  behalf  of  mortgagees,  are  not  necessa- 
rily or  exclusively  the  property  of  the  mortgagees,  but  are 
subject  to  the  disposal  of  the  court  in  the  payment  of  claims 
having  superior  equities.1 

§  394  e.  Preference  has  also  been  given  in  the  payment 
out  of  receiver's  income  of  operating  expenses  incurred  by 
the  company,  as  for  labor,  supplies  and  equipment  in  the 
operation  of  the  road,  upon  the  ground  that  the  mortgagee, 
having  invoked  the  extraordinary  aid  of  a  court  of  equity 
by  the  appointment  of  a  receiver  in  aid  of  the  foreclosure, 
the  court  may  impose  such  just  and  reasonable  conditions  to 
the  relief  sought  as  the  exigencies  of  the  case  may  require. 
The  mortgagee  usually  having  the  right  under  the  terms  of 
his  mortgage  to  take  possession  after  default,  he  may,  if  he 
sees  fit,  invoke  the  ordinary  legal  remedies  to  obtain  such 
possession  and  to  enforce  his  Hen.  If,  instead  of  so  doing,  he 
seeks  the  extraordinary  remedy  of  a  receiver  to  manage  the 
property,  he  must  submit  to  such  conditions  as  the  court  may 
see  fit  to  impose  with  reference  to  the  payment  of  operating 
expenses  already  incurred,  out  of  the  income  of  the  receiver- 
ship. And  the  fact  that  the  mortgagee  has  suffered  the 
railway  company  to  continue  in  the  possession  and  manage- 
ment of  the  property  for  a  considerable  period  of  time  after 
default,  thereby  permitting  new  obligations  to  be  incurred 

In  Skiddy  v.  A.,  M.  &  O.  R.  Co.,  3  which  had  been  assigned  to  third 

Hughes,  320,  the  same  court  or-  persons,  and  also  refused  payment 

dered  payment  by  the  receivers  of  for  rails  and  supplies  furnished  to 

wages  due  to  employees  for  eight  the  company, 

months  prior  to  the  receivership,  » Hale  v.  Frost,  99  U.  S.,  389. 
but  refused  payment  of  such  claims 


CHAP.  XI.]  RAILWAYS.  330 

for  operating  expenses  and  for  the  maintenance  of  the 
property,  affords  additional  ground  for  requiring  such  obli- 
gations to  be  discharged  out  of  the  income  of  the  receiver 
as  a  condition  to  his  appointment.1  And  in  this  class  of 
cases,  the  right  to  preference  is  regarded  as  attaching  to  the 
debt  or  demand  itself,  and  not  to  the  person  of  the  creditor. 
It  therefore  passes  by  assignment,  and  the  same  preference 
may  be  allowed  to  an  assignee  of  the  original  demand.2 

§  394/".  Questions  concerning  the  payment  out  of  re- 
ceiver's income  of  rentals  due  upon  rolling  stock  leased  by 
the  company  prior  to  the  receivership  are  governed  by  sub- 
stantially the  same  rules  which  have  been  discussed  in  the 
preceding  sections.  These  questions  are  usually  presented 
in  cases  where  the  company  had  leased  rolling  stock  under 
what  are  known  as  car-trust  leases,  or  other  evidences  of 
conditional  sale,  the  lessor  or  vendor  retaining  the  title  to 
or  a  lien  upon  the  rolling  stock,  until  the  stipulated  pay- 
ments are  fully  made  by  the  company.  In  such  cases,  the 
vendor's  title  or  hen  is  unaffected  by  the  appointment  of 
the  receiver,  that  officer  acquiring  no  better  title  to  the 
rolling  stock  than  that  of  the  company.  If  the  receiver 
continues  to  use  such  rolling  stock,  the  owner  or  lessor  is 
entitled  to  just  compensation  for  its  use,  to  be  paid  out  of 
the  receiver's  earnings,  such  payment  being,  in  effect,  the 
application  of  current  income  to  the  payment  of  current 
expenses.3  Whether,  in  the  event  of  a  deficiency  of  re- 
ceiver's income,  such  car  rentals,  accruing  either  before  or 
during  the  receivership,  are  entitled  to  pa}^ment  in  full  out 

1  Union  Trust  Co.  v.  Souther,  107  Bridge  Co.  v.  Douglass,  12  Bush, 

U.  S.,  591;  Douglass  v.  Cline,  12  673. 

Bush,  608.      See,  also,  Fosdick  v.  2  Union  Trust  Co.  v.  Walker,  107 

Schall,  99  U.  S.,  235;  Burnham  v.  U.  S.,  596;  Burnham  r.Bowen,  111 

Bowen,  111  U.  S.,  776.    As  to  the  U.  S.,  776.     See,  contra,  Skiddy  v. 

right  to  net  earnings  in  such  a  case,  A.,  M.  &  O.  R.  Co.,  3  Hughes,  320. 

as  between  mortgage  bondholders  » Fosdick  v.  Schall,  99  U.  S.,  235; 

and  various  classes  of  unsecured  Myer  v.  Car  Co.,  102  U.  S.,  1;  Coe 

creditors,  see  Newport  &  Cincinnati  v.  New  Jersey  Midland  R.  Co.,  27 

N.  J.  Eq.,  37. 


;±o 


RECEIVERS. 


[CHAP.  XI. 


of  the  proceeds  of  foreclosure  sale,  has  been  said  to  be  de- 
pendent upon  whether  there  has  been  a  diversion  of  current 
income  from  current  expenses  during  the  receivership.1 
Upon  principle,  however,  it  is  impossible  to  discriminate 
between  claims  of  this  character,  and  those  for  wages,  mate- 
rials and  other  operating  expenses,  which,  as  already  shown, 
have  been  frequently  allowed  priority  out  of  receiver's  in- 
come, or  have  been  paid  out  of  the  sale  of  the  property^ 
in  the  absence  of  any  evidence  of  diversion  of  income, 
upon  other  equitable  considerations  addressing  themselves 
to  the  discretionary  powers  of  the  court.2  But  if  the  re- 
ceiver's income  is  sufficient  to  pay  for  additional  rolling 
stock  necessary  to  the  operation  of  the  road,  the  court  will 
not  permit  him  to  make  a  loan  by  the  creation  of  a  car  trust 
to  procure  such  rolling  stock,  in  order  that  current  income 
may  be  applied  to  interest  upon  bonded  indebtedness.3  And 
if  cars  held  by  the  company  under  conditional  sales  are 
used  by  the  receiver  and  sold  under  the  foreclosure  decree, 


iFosdick  v.  Sckall,  99  U.  S., 
235. 

2  Miltenberger  v.  Logansport  R. 
Co.,  106  TJ.  S.,  286.  In  this  case, 
the  receiver  having  made  an  ad- 
justment with  the  owners  of  roll- 
ing stock  held  under  conditional 
sales  to  the  company,  the  nature 
of  which  is  not  clearly  set  forth  in 
the  case  as  reported,  and  having 
purchased  rolling  stock,  these 
allowances,  with  others,  were 
awarded  priority  over  the  mort- 
gage indebtedness,  to  be  paid  out 
of  the  receiver's  earnings,  or,  if 
necessary,  out  of  the  proceeds  of 
foreclosure.  And  in  Central  Trust 
Co.  v.  T.,  D.  &  B.  R.  Co.,  unre- 
ported, in  the  United  States  circuit 
court  for  the  seventh  circuit,  at  In- 
dianapolis, June,  1885,  it  was 
ordered,  Judges  Gresham  and 
Woods  concurring,  that  rentals  of 


rolling  stock  held  by  the  company, 
under  car-trust  leases,  should,  for 
the  period  of  use  by  the  receiver,  be 
paid  as  a  first  Men,  out  of  receiver's 
income  or  out  of  the  proceeds  of 
foreclosure  sale,  before  distribution 
to  mortgage  bondholders,  and  that 
rentals  for  six  months  prior  to  the 
receivership  should  be  paid  out  of 
the  net  income  of  the  receiver.  In 
Coe  v.  New  Jersey  Midland  R.  Co., 
21  N.  J.  Eq.,  37,  it  was  held  that 
lessors  of  rolling  stock  leased  to  a 
railway  company  were  not  entitled 
to  payment  in  full  of  the  rent  re- 
served in  the  lease,  at  the  hands 
of  the  receivers,  unless  the  court 
should  find  that  such  payment  was 
for  the  best  interests  of  the  trust 
represented  by  the  receivers. 

» Taylor  v.  P.  &  R.  R.  Co.,  9  Fed. 
Rep.,  1. 


CHAP.  XI.]  RAILWAYS.  341 

the  vendor  ma}-  be  paid  in  full  out  of  the  proceeds  of  such 
sale,  his  lien  upon  the  cars  being  paramount  to  that  of  the 
mortgagees.1  So  if  rolling  stock  is  purchased  by  the  receiver 
out  of  the  earnings  of  the  road  and  sold  under  the  fore- 
closure, the  mortgage  covering  after-acquired  property,  the 
purchaser  at  the  sale  is  entitled  to  such  rolling  stock  as 
against  the  mortgagees.2 

§  394 g.  The  income  of  a  railroad  while  operated  by  re- 
ceivers appointed  in  behalf  of  mortgage  bondholders  is 
regarded  as  part  of  the  mortgaged  property  in  the  sense 
that  it  is  to  be  applied  to  expenses  of  administration  and 
management,  and  to  the  liens  and  trusts  with  which  it  is 
charged.  And  until  such  expenses  and  liens  have  been  satis- 
fied, judgment  creditors  of  the  railway  company  are  not 
entitled  to  payment  out  of  the  income.3  But  judgment 
creditors  of  the  company,  who  are  entitled  to  payment  out 
of  the  funds  in  the  hands  of  or  due  to  the  company  when 
the  receiver  is  appointed,  may,  if  such  funds  are  otherwise 
appropriated  by  the  receiver,  be  paid  in  full  out  of  the  re- 
ceiver's income  in  preference  to  mortgage  bondholders.4 
Whether  a  judgment  against  the  receiver  himself  is  pa}-able 
out  of  the  proceeds  of  foreclosure  would  seem  to  depend 
rather  upon  the  nature  of  the  cause  of  action  than  upon  the 
fact  that  the  demand  has  been  reduced  to  judgment.  If 
the  cause  of  action  grows  out  of  materials  supplied  for  the 
necessary  operation  of  the  road  for  the  benefit  of  the  mort- 
gagees, as  for  rental  of  and  repairs  to  rolling  stock  used  by 
the  receiver,  a  judgment  recovered  against  him  in  a  suit 
brought  by  leave  of  the  court  appointing  him,  and  in  a  court 
of  competent  jurisdiction,  is  conclusive  against  the  bond- 
holders and  may  be  paid  out  of  the  proceeds  of  foreclosure.5 

i  Fosdick  v.  Car  Company,  99  U.  itors  of  the  company  in  the  order 

S.,  256.  of  their  priorities. 

2 Strang  v.   M.   &  E.   R.    Co.,  3  3  North  Carolina  R.  Co.  v.  Drew, 

Woods,  613.    But  it  is  held  in  the  3  Woods,  692. 

same  case,  that  the  purchaser  is  not  4Gibert  v.  W.  C,  V.  M.  &  G.  S. 

entitled  to  a  balance  of  income  re-  R.  Co.,  33  Grat.,  643. 

maining  in  the    receiver's  hands,  5  Turner  v.  L,  B.  &  W.  R.  Co.,  8 

such  income  belonging  to  the  cred-  Biss.,  527. 


34:2  RECEIVERS.  [CHAP.  XI. 

But  if  the  judgment  is  for  personal  injuries  sustained  by  a 
passenger  upon  the  road  while  operated  by  the  receiver,  it 
is  held  not  to  be  entitled  to  payment  out  of  the  fund  aris- 
ing from  the  foreclosure.  Such  a  judgment,  it  is  held,  is 
no  more  entitled  to  be  made  a  Hen  upon  the  property  or 
fund,  as  against  the  mortgagees,  than  if  the  injury  had  been 
sustained  while  the  road  was  operated  by  the  company,  the 
creation  of  such  Hen  not  being  necessary  to  the  operation 
of  the  road  for  the  benefit  of  the  bondholders  in  whose  be- 
half the  receiver  is  appointed.1  Such  a  judgment  may, 
however,  be  paid  out  of  the  net  income  of  the  receivership 
in  preference  to  the  claims  of  the  bondholders  to  such  in- 
come.2 

§  394  h.  Claims  of  general  creditors  of  a  railway  com- 
pany, incurred  prior  to  the  receivership,  and  which  do  not 
fall  within  the  class  of  operating  expenses  embracing  labor, 
supplies,  materials  or  equipment,  and  which  do  not,  there- 
fore, have  any  special  equities  entitling  them  to  payonent 
out  of  current  income,  will  not  be  preferred  out  of  the  earn- 
ings of  the  receiver,  or  out  of  the  proceeds  of  the  foreclos- 
ure sale.  Among  these  may  be  classed  claims  for  salaries 
of  officers  of  the  company,  money  loaned  to  the  company, 
claims  of  contractors  for  construction,3  and  money  advanced 
to  complete  the  construction  of  the  road,  which  will  not  be 
preferred  when  it  is  not  shown  that  such  advances  were 
made  at  the  request  of  or  by  reason  of  the  promises  of  the 
bondholders.4  So  a  cause  of  action  against  a  railway  com- 
pany, growing  out  of  the  destruction  of  property  caused  by 
fire  escaping  from  a  locomotive,  does  not  fall  within  that 
class  of  operating  expenses  which  have  been  allowed  prior- 
ity, and  can  not  be  enforced  against  the  receiver.5 

§  394  i.  Statutory  liens  upon  the  property  of  a  railway 
company,  given  to  creditors  furnishing  labor  and  supplies, 

1  Davenport     v.      Receivers,      2  3  Addison  v.  Lewis,  75  Va.,  701. 

Woods,  519.    And  see  Hopkins  v.  *  In  re  Kelly,  5  Fed.  Rep.,  846; 

Connel,  2  Tenn.  Ch.,  323.  S.  C,  10  Biss.,  151. 

*  Ex  parte  Brown,  15  S.  C,  518;  5  Holes   v.    Case,   14   Fed.   Rep., 

Klein  v.  Jewett,  26  N.  J.  Eq.,  474.  141. 


CHAP.  XI.]  RAILWAYS.  343 

may  be  enforced  and  the  rights  of  such  creditors  protected, 
notwithstanding  the  appointment  of  receivers  in  foreclosure 
proceedings  against  the  company.  And  when  such  cred- 
itors are  entitled,  by  statute,  to  an  attachment  against  the 
rolling  stock  and  personal  property  of  the  railway,  the  rights 
of  the  mortgagees  being  subordinated  by  the  statute  to 
those  of  the  attaching  creditors,  they  may  enforce  their 
rights  after  the  appointment  of  receivers  against  such  prop- 
erty, and  if  that  shall  prove  insufficient  they  may  be  pre- 
ferred in  payment  out  of  the  net  income  of  the  receivers.1 
So  when  the  receiver  has  been  appointed  by  a  federal  court, 
creditors  claiming  statutory  liens  upon  the  property  may  be 
permitted  to  present  their  claims  in  the  suit  in  which  the 
receiver  was  appointed,  with  like  effect  as  if  filed  in  the 
courts  of  the  state.  And  creditors  claiming  an  equitable 
lien  under  demands  arising  in  other  states,  where  no  stat- 
utory lien  is  given,  may  establish  their  claims  in  the  same 
manner  against  the  fund  in  the  hands  of  the  receiver.2  But 
whether  interest  shall  be  paid  upon  demands  which  are 
allowed  by  the  court  out  of  the  funds  of  the  receivership  is 
regarded  as  depending  upon  the  nature  of  the  cause  of  ac- 
tion itself,  rather  than  upon  the  fact  that  it  has  been  reduced 
to  judgment.  And  where  claims  for  damages  resulting  from 
the  operation  of  the  railway  are  reduced  to  judgment  in  ac- 
tions against  the  corporation,  and  are  afterward  allowed  as 
claims  against  the  receiver's  funds,  they  are  not  entitled  to 
interest,  since  as  against  the  fund  they  are  treated  as  divested 
of  their  character  as  judgments  and  rest  upon  the  equities 
of  the  original  cause  of  action,  the  damages  in  which  were 
unliquidated.3 

1  Poland  v.  Kailroad  Co.,  52  Vt.,  of  a  final  hearing  as  to  all  claims 

144.  upon  such  property,  when  conflict- 

2 Blah  v.  St.  L.,  H.  &  K.  R.  Co.,  ing  claims  and  liens  are  asserted  by 
19  Fed.  Rep.,  861.  But  persons  different  parties  in  interest.  Re- 
claiming an  equitable  Men  for  ad-  ceivers  v.  Wortendyke,  27  N.  J.  Eq., 
vances  upon  rolling  stock  in  use  by  658. 

the  receiver  should  not  be  heard,  or  3  Ex  parte  Brown,  18  S.  C,  87. 
their  rights  determined,  in  advance 


\u 


RECEIVERS. 


[CHAT.  XL 


I 


m 


V.  Actions  against  the  Receiver. 

§  395.     Receivers  answerable  in  official  capacity  for  injuries  sustained. 
395  a.  Leave  to  sue  receiver  necessary ;  relief  on  petition. 
395  b.  New  York  decisions  unsettled ;  liability  for  injuries ;  rental  of 
leased  lines. 

396.  Railway  company  in  hands  of  receiver  not  responsible  for  neg- 

ligence of  bis  servants. 

397.  Statutory  HabiUty  of  company  for  killing  cattle ;  judgment  not 

enforceable  by  state  court  out  of  funds  held  by  receiver  of 
United  States  court. 

398.  Receivers  liable  to  action  for  breach  of  duty  as  common  carriers. 
398  a.  Right  of  way ;  contract  with  express  company. 

398  b.  Receiver  not  liable  after  discharge ;  liability  of  purchasers  of 
road. 


§  395.  It  has  elsewhere  been  shown,  that,  as  to  rights  of 
action  which  may  be  maintained  against  receivers,  they  are, 
in  general,  the  same  which  might  have  been  maintained 
against  the  person  to  whose  estate  and  rights  the  receiver 
succeeds.  And  in  conformity  with  this  general  doctrine, 
when  the  affairs  of  a  railway  company  have  passed  into 
the  hands  of  receivers,  who  are  operating  the  road  under 
the  direction  of  the  court,  having  exclusive  charge  of  its 
management  and  of  the  employment  of  operatives  and  em- 
ployees, the  entire  control  of  the  company  having  passed 
to  the  receivers  as  fully  as  it  was  before  exercised  by  the 
officers  of  the  road,  the  receivers  may  be  held  answerable 
in  their  official  capacity  for  injuries  sustained,  in  the  same 
manner  that  the  corporation  would  have  been  liable.  An 
action  will,  therefore,  lie  against  such  receivers  in  their 
official  capacity,  leave  of  the  court  being  obtained,  to  re- 
cover for  personal  injuries  sustained  by  reason  of  the  neg- 
ligent manap-ement  of  the  road.  And  in  determining  the 
liability  of  the  receivers,  in  such  cases,  upon  such  questions 
as  negligence  of  principal  and  of  agent,  acts  of  co-employees, 
responsibility  for  defective  machinery,  and  kindred  questions, 
the  same  principles  are  applicable  which  govern  this  class 


CHAP.  XI.] 


RAILWAYS. 


345 


of   actions  when  instituted  against   rail\va}Ts   themselves.1 
In  such  an  action,  the  receivers  can  not  exempt  themselves 


^leara's  Administrator  v.  Hol- 
brook,  20  Ohio  St.,  137;  Potter  v. 
Bunnell,  id.,  159;  Klein  v.  Jewett, 
26  N.  J.  Eq.,  474;  Erwin  v.  Daven- 
port, 9  Heisk.,  44 ;  Ex  parte  Brown, 
15  S.  O,  518;  Ex  parte  Johnson, 
19  S.  C,  492.  See,  also,  Ohio  & 
Mississippi  R.  Co.  v.  Davis,  23  Ind., 
553;  Nichols  v.  Smith,  115  Mass., 
332;  Sloan  v.  Central  Iowa  R.  Co., 
62  Iowa,  728 ;  Blurnenthal  v.  Brain- 
erd,  38  Vt.,  402;  Paige  v.  Smith,  99 
Mass.,  395.  But  see,  contra,  Hen- 
derson v.  Walker,  55  Ga.,  481; 
Thurman  v.  Cherokee  R.  Co.,  56 
Ga.,  376;  Cardot  v.  Barney,  63  N. 
Y.,  281.  Meara's  Administrator  v. 
Holbrook,  20  Ohio  St.,  137,  was  an 
action  by  an  administrator,  brought 
by  leave  of  court  against  the  re- 
ceivers of  a  railroad,  for  personal 
injuries  alleged  to  have  been  sus- 
tained by  the  deceased,  who  was  a 
laborer  on  the  railroad,  in  the  em- 
ploy of  defendants,  in  attempting 
to  couple  two  cars  in  use  upon  the 
road.  The  cause  of  action  was  set 
forth  in  a  petition  and  an  amended 
petition,  to  both  of  which  demur- 
rers were  filed.  The  demurrers 
were  sustained  in  the  court  below 
and  judgment  was  rendered  against 
the  plaintiff.  On  error  to  the  su- 
preme court,  the  judgment  was 
reversed.  The  court,  Day,  J.,  ob- 
serve, p.  147:  "The  demurrers 
admit  the  truth  of  the  allegations 
contained  in  the  petitions.  It  is 
averred  in  each  of  them  that  Meara 
was  employed  by  the  receivers  as  a 
laborer  on  the  railroad.  It  is, 
therefore,  not  questioned  but  that 
his  position  as  such  was  subordi- 


nate to  the  managing  agents  and 
superintendents  of  the  receivers. 
It  is  averred  in  each  of  the  peti- 
tions that  the  death  of  Meara  was 
caused  while  engaged  in  the  busi- 
ness of  the  receivers,  without  any 
fault  of  his  own.  In  the  original 
petition  it  is  alleged  to  have  been 
caused  by  the  negligence  of  the 
agents  and  superintendents  of  the 
receivers;  and,  in  both  the 
amended  petitions,  by  the  negli- 
gence of  the  receivers  themselves. 
The  questions  are,  therefore,  pre- 
sented, whether  a  receiver  operat- 
ing a  railroad  is  answerable  in  his 
official  capacity  for  an  injury  to 
his  servant,  sustained,  while  in  his 
employment,  by  reason  of  the  neg- 
ligence of  the  receiver,  or  the  neg- 
ligence of  his  agents  in  a  position 
superior  to  that  of  the  servant. 
On  the  strength  of  the  authorities 
already  cited,  as  well  as  the  reason 
and  justice  of  the  case,  we  think 
the  question  of  his  liability,  in  an 
action  against  him  as  receiver, 
should  be  determined  by  the  same 
rules  and  principles  that  are  appli- 
cable to  persons  or  corporations  en- 
gaged in  the  business  of  operating 
a  railroad.  .  .  Nor  would  a  re- 
covery against  him,  and  satisfac- 
tion out  of  the  fund  properly 
applicable  to  that  purpose,  work  a 
greater  hardship  to  the  creditors 
and  stockholders  of  the  company 
than  that  always  sustained  by  them 
where  the  company  itself  is  made 
liable  for  like  grievances  when  it 
operates  its  own  road.  On  the 
contrary,  if  the  receiver  be  not 
held  officially  chargeable,  in  many 


346 


EECEIVERS. 


[CHAP.  XI. 


from,  liability  on  the  ground  that  they  are  public  officers, 
and  as  such,  not  responsible  for  the  negligence  of  their  em- 
ployees, nor  on  the  ground  that  they  are  agents  and  trustees; 
for,  as  to  the  public  and  as  to  their  employees,  the  receivers 
occupy  neither  of  these  capacities,  there  being  no  tangible 
principal  behind  them  who  can  be  held  liable  in  such  ac- 
tions.1 And  since  they  exercise  the  functions  and  powers 
of  common  carriers,  they  can  not  escape  corresponding 
duties  and  liabilities.2 

§  395  a.  It  is  to  be  borne  in  mind  that  the  general  doc- 
trine elsewhere  discussed,3  requiring  leave  of  court  to  be 
granted  before  suit  can  be  brought  against  a  receiver, 
applies  with  equal  force  in  actions  against  receivers  of  rail- 


instances  they  might  gain  an  ad- 
vantage, by  his  operating  the  road, 
over  what  they  would  have  if  the 
company  conducted  its  own  busi- 
ness, subject  to  its  incidental  losses. 
Nor  does  it  follow,  if  the  receiver 
be  held  answerable  as  the  company 
would  have  been  if  it  had  operated 
the  road,  that  he  would  be  relieved 
from  accountability  to  his  cestui 
que  trusts  for  losses  they  might 
sustain  through  his  personal  mis- 
conduct or  negligence.  In  every 
view,  therefore,  it  accords  with 
sound  principle  and  reason,  that  a 
receiver,  exercising  the  franchises 
of  a  railroad  company,  should  be 
held  amenable  in  his  official  capac- 
ity to  the  same  rules  of  liability 
that  are  applicable  to  the  company 
while  it  exercises  the  same  powers 
of  operating  the  road.  In  deter- 
mining the  case  before  us,  then,  it 
only  remains  for  us  to  apply  the 
ordinary  principles  controlling 
cases  of  this  class.  Where  a  sub- 
ordinate servant  is  injured,  with- 
out his  own  fault,  while  engaged 


in  the  business  of  his  employment, 
by  reason  of  the  negligence  of  his 
master  or  his  agents,  the  master  is 
liable  to  him  in  damages.  Fifield 
v.  Northern  Railroad,  42  N.  S., 
225;  Brydon  v.  Stewart,  2  Macq. 
H.  L.,  30;  Railroad  v.  Keary,  3 
Ohio  St.,  201.  Meara  was  the  serv- 
ant of  the  receivers  and  was  in- 
jured, according  to  the  cases  made 
in  the  several  petitions  demurred 
to,  either  through  the  negligence 
of  the  receivers,  or  that  of  then 
agents  in  a  position  superior  to 
that  of  Meara.  The  receivers  are, 
therefore,  liable.  It  follows  that 
the  court  of  common  pleas  erred 
in  sustaining  the  demurrers  of  the 
receivers  to  each  of  the  petitions, 
and  that  the  judgment  in  their 
favor  must,  therefore,  be  reversed." 

^leara's  Administrator  v.  Hol- 
brook,  20  Ohio  St.,  137.  See,  con- 
tra, Cardot  v.  Barney,  63  N.  Y., 
281. 

-Ex  parte  Brown,  15  S.  C,  518. 

3  Chapter  VIII,  subdivision  V, 
ante. 


•OHAP.  XI. ]  EAILWAYS.  347 

ways.1  And  it  rests  wholly  within  the  discretion  of  the 
court  appointing  the  receiver,  upon  leave  being  asked  to 
luring  an  action  against  him,  to  grant  permission  to  bring  an 
independent  suit,  or  to  determine  the  matter  upon  petition 
in  the  cause  in  which  he  was  appointed,  directing,  if  neces- 
sary, an  issue  to  be  tried  by  a  jury  as  to  the  damages  sus- 
tained.2 The  general  usage  is  to  determine  all  demands 
against  a  receiver  upon  petition  in  the  original  cause,  and 
thk  practice  is  both  more  expeditious  and  more  economical 
than  by  resort  to  an  independent  action.  And  the  right  to 
a  trial  by  jury,  in  such  cases,  is  treated  as  wholly  discretion- 
ary with  the  court,  which  may  direct  the  issues  of  fact  to  be 
tried  by  a  jury  if  it  sees  fit,  or  may  refer  them  to  a  master 
for  determination.3  In  New  Jersey,  however,  it  is  regarded 
as  the  better  practice,  when  the  cause  of  action  is  in  tort,  to 
grant  leave  to  bring  an  independent  action  at  law  against 
the  receiver,  a  court  of  equity  not  being  the  proper  forum 
for  determining  questions  of  tort  and  of  damages.4 

§  395  b.  Notwithstanding  the  general  doctrine,  holding 
receivers  of  railways  to  the  same  liabilities  as  common  car- 
riers as  the  companies  themselves,  has  the  clear  weight  both 
of  principle  and  of  authority  in  its  support,  it  has  not  been 
uniformly  followed  in  New  York,  and  some  inconsistency 
and  much  uncertainty  are  observable  in  the  decisions  in 
that  state  upon  the  question  under  consideration.     Thus,  it 

«  Barton  «.  Barbour,  104  U.  S.,  *  Kennedy  v.  I.,  C.  &  L.  R.  Co., 

126,  affirming  S.  C,  3  MacArthur,  3  Fed.  Rep.,  97;  S.  C,  2  Flippin, 

212;  Melendy  v.  Barbour,  78  Va.,  704. 

544;  Kennedy  v.  I.,  C.  &  L.  R.  Co.,  4  Palys  v.  Jewett,  33  N.  J.  Eq., 
3  <Fed.  Rep.,  97;  S.  C,  2  Flip-  302.  But  it  is  held  in  the  same  case, 
pin,  704.  See,  contra,  Kinney  v.  that  where  the  person  seeking  dam- 
•Crecker,  18  Wis.,  74;  St.  Joseph  &  ages  for  injuries  sustained  while  the 
Denver  City  R.  Co.  v.  Smith,  19  road  is  operated  by  a  receiver  sub- 
Ksn.,  225;  Btmmenthal  v.  Brainerd,  mits  Ins  demand  by  petition  in  tho 
38  Vt.,  402;  Paige  v.  Smith,  99  equity  suit,  and  both  parties  sub- 
Maes.,  395.  mit  to  a  hearing  in  tins  forrn,  the 

^ Melendy  v..  Barbour,  78  Va.,544;  judgment  of  the  court  below  may 

Kennedy  v.  I.,  C.  &  L.  R.  Co.,  3  be  reviewed  upon  the  merits  on 

Fs<L  Rep.,  97^  S.  C,  2  Flippin,  704.  appeal. 


318  RECEIVERS.  [CHAP.  XI. 

has  been  held  that  the  receiver  occupies  a  position  analo- 
gous to  that  of  a  public  officer,  charged  with  duties  of  a 
public  nature,  in  the  performance  of  which  he  is  compelled 
to  act  in  part  through  others,  and  that  it  would  be  a  great, 
hardship  to  impose  upon  him  the  responsibilities  which 
attach  to  persons  acting  through  agents  appointed  for  their 
own  convenience  or  profit.  And  upon  these  considerations, 
it  has  been  held  that  he  is  not  liable  to  passengers  for  inju- 
ries sustained  by  the  negligence  of  his  employees,  when  no- 
personal  neglect  is  imputed  to  the  receiver  in  the  selection 
of  such  employees,  the  doctrine  of  respondeat  superior  not 
being  applicable  in  such  cases.1  The  same  court  having 
previously  held  that,  when  a  railroad  is  operated  by  a  special 
receiver  appointed  in  bankruptc}^  proceedings,  the  company 
is  not  liable  in  an  action  for  damages  sustained  through  the 
negligence  of  the  receiver's  employees,2  in  the  light  of  these 
decisions  there  would  seem  to  be  absolutely  no  remedy  in 
New  York,  to  one  sustaining  loss  or  damage  through  the 
operation  of  a  railroad  by  a  receiver.  But  in  a  later  case,  it 
is  held  that  a  receiver  of  another  state,  who,  under  the 
authority  of  the  court  appointing  him,  operates  a  railroad 
in  New  York  as  lessee,  having  covenanted  in  the  lease  to 
assume  all  obligations  of  the  lessor  company  as  a  common 
carrier  or  otherwise,  is  liable  to  an  action  in  New  York  for 
damages  for  injuries  sustained  by  an  employee  upon  such 
road  by  reason  of  defective  machinery.  In  such  case,  it  is 
held  that  his  liability  is  not  affected  by  the  fact  that  he  is  a 
receiver  in  the  foreign  state,  since  he  is  not  in  possession  of 
the  road  in  New  York,  as  such  receiver,  but  by  virtue  of  his 
contract,  and  he  can  not,  therefore,  escape  the  ordinary  lia- 
bilities of  persons  operating  railroads.     And  the  action  being 

1Cardotv.  Barney,  63  N.  Y.,  281.  the  receiver  personally,  he  would 
In  Camp  v.  Barney,  6  N.  Y.  S.  C.  be  liable  in  such  action  as  receiver, 
(Thomp.  &  Cook),  622 ;  4  Hun,  373,  and  the  judgment  should  be  made 
it  was  held  by  the  supreme  court  of  payable  out  of  the  funds  in  Ins- 
New  York,  that,  while  an  action  hands  as  receiver. 
for  personal  injuries  sustained  by  -  Metz  v.  B.yC  &  P.  R.  Co.,  58  N* 
a  passenger  would  not  he  against  Y.,  61. 


CHAP.  XI.]  RAILWAYS.  349 

in  tort,  it  may  be  brought  against  one  of  several  receivers 
who  occupy  the  same  relation  to  the  property  and  to  the 
subject-matter  of  the  action.1  And  in  a  still  later  case,  it  is 
held  that  when,  by  the  order  appointing  him,  the  receiver  is 
authorized  to  take  possession  of  all  the  property  of  the  com- 
pany and  to  exercise  its  functions  and  continue  its  opera- 
tions, and  to  pay  rentals  under  any  leases  held  by  the 
company,  if  he  takes  possession  of  and  operates  a  road  held 
under  lease  by  the  company,  he  thereby  assumes  the  obliga- 
tions of  the  lessee  and  binds  the  estate  to  the  payment  of 
the  rent.  An  action  may,  therefore,  be  maintained  against 
him  to  recover  such  rent  out  of  the  funds  in  his  hands,  and 
in  such  action  he  is  estopped  from  denying  the  validity  of 
the  lease.2 

§  396.  Since  the  receivers  of  a  railway,  who  are  vested 
with  its  absolute  control  and  management,  are  thus  liable 
for  injuries  resulting  from  negligence  in  operating  the  road, 
to  the  same  extent  that  the  company  itself  might  have  been 
held  liable,  it  would  seem  to  be  clear,  upon  principle,  and  in 
the  absence  of  any  absolute  liability  created  by  statute,  that 
the  corporation  itself  can  not  be  held  responsible  for  the 
negligence  of  servants  of  a  receiver  operating  the  road. 
The  receiver's  possession  is  not  the  possession  of  the  corpo- 
ration, but  is  antagonistic  thereto,  and  the  company  can  not 
control  either  the  receiver  or  his  employees.  And  in  an  ac- 
tion against  a  railway  company  for  damages  for  personal 
injuries  alleged  to  have  resulted  from  the  carelessness  and 
negligence  of  employees  and  servants,  it  is  a  sufficient  de- 
fense that  the  road,  at  the  time  of  the  alleged  injury,  was 
not  in  defendant's  possession,  but  in  the  possession  of  a  re- 
ceiver, who  had  exclusive  charge  of  the  employment  and 
management  of  the  agents  and  employees  engaged  in  oper- 
ating the  road.3    But  where  a  railway  company,  in  an  action 

iKain  v.  Smith,  80  N.  Y.,  458.  3  Ohio  &    Mississippi    R.    Co.   v. 

And  see  Fuller  v,  Jewett,  80  N.  Y.,  Davis,  23  Lid.,  553 ;  Bell  v.  I.,  C.  & 

46.  L.   E.  Co.,  53  Ind.,  57;  Turner  v. 

2  Woodruff  v.  Erie  R.  Co.,  93  N.  Hannibal  &  St.  Joseph  R.  Co.,  74 

Y..  C09.  Mo.,  002 ;  Oluo  &  Mississippi  R.  Co. 


350 


BECEIVEKS. 


[CHAP.  XI. 


brought  against  it  for  damages,  pleads  the  appointment  of 
a  receiver  who  has  charge  of  its  affairs,  a  copy  of  the  order 
of  appointment,  or  the  original,  should  be  set  forth  with  the 
pleadings.1 

§  397.  Where,  however,  an  absolute  liability  is  fixed 
upon  a  railway  company  by  statute,  a  different  principle 
prevails.  Thus,  if  the  company  is  made  by  statute  abso- 
lutely liable  for  the  killing  of  stock  in  cases  where  its  road 
is  not  securely  fenced,  the  fact  that  the  affairs  of  the  com- 
pany have  passed  into  the  hands  of  a  receiver,  appointed  by 
the  federal  court,  constitutes  no  defense  to  an  action  on  such 
liability  against  the  railway  company  in  the  state  court,  and 
the  plaintiff  may  recover  judgment  in  such  action  upon  the 
statutory  liability,  notwithstanding  the  possession  of  the 
receiver.  In  such  cases,  it  is  held  that  the  corporate  body 
still  exists,  and  since  the  law  renders  it  liable,  the  receiver 
operates  the  road  subject  to  such  liability.2    But  the  state 


v.  Anderson,  10  Braclw.,  313;  Hicks 
v.  I.  &  G.  N.  R.  Co.,  62  Tex.,  38. 
See,  also,  Metz  v.  B.,  C.  &  P.  R.  Co., 
58  N.  Y.,  61 ;  I.  &  G.  N.  R.  Co.  v. 
Ormond,  62  Tex.,  274.  But  it  has 
been  held  that  in  such  an  action 
against  the  company,  the  fact  that 
the  road  is  in  the  hands  of  a  re- 
ceiver can  not  be  inquired  into 
upon  a  motion  to  dismiss  for  want 
of  jurisdiction,  although  it  may  be 
urged  in  defense  of  the  action. 
Wyattu.  O.  &  M.  R.  Co.,  10  Bradw., 
289. 

lOhio  &  Mississippi  R.  Co.  v. 
Fitch,  20  Ind.,  498. 

2  Ohio  &  Mississippi  R.  Co.  v. 
Fitch,  20  Ind.,  498;  McKinney  v. 
Ohio  &  Mississippi  R.  Co.,  22  Ind., 
99 ;  Louisville,  New  Albany  &  Chi- 
cago R.  Co.  v.  Cauble,  46  Ind.,  277; 
Kansas  Pacific  R.  Co.  v.  Wood,  24 
Kan.,  619.  The  doctrine  of  the 
text  is  very  clearly  stated  in  Louis- 
ville, New  Albany  &  Chicago  R. 
Co.  v.  Cauble,  46  Ind.,  277,  by  Bus- 


kirk,  J.,  who  says,  p.  279:  "By  tiiie 
first  section  of  the  act  of  March  4, 
1863,  3 Ind.  Stat.,  413, it  is  provided 
'that  lessees,  assignees,  receivers 
and  other  persons,  running  or  con- 
trolling any  railroad,  in  the  corpo- 
rate name  of  such  company,  shall 
be  liable,  jointly  or  severally  with 
such  company,  for  stock  kilted  or 
injured  by  the  locomotives,  cars  ox- 
other  carriages  of  such  company, 
to  the  extent  and  according  to  the 
provisions  of  this  act.'  By  the 
above  quoted  section,  lessees,  as- 
signees, receivers  or  other  persons 
running  or  controlling  any  railroad1 
company  in  the  corporate  name  of 
such  company  are  made  liable- 
either  jointly  with  th©  railroad! 
company,  or  severally,  that  is,  with- 
out the  company  being  joined  with 
them,  for  stock  killed  or  injured  by 
the  locomotives,  cars  or  other  car- 
riages of  such  company,  to  the  ex- 
tent and  according  to  the  provisions 
of  such  act.    By  the  second  section 


CHAP.  XI.] 


RAILWAYS. 


351 


court  is  powerless  to  enforce  payment  of  the  judgment  re- 
covered out  of  funds  in  the  hands  of  a  receiver  appointed 
by  the  United  States  court,  even  under  a  statute  of  the  state 
providing  a  process  for  the  enforcement  of  judgments 
against  railway  corporations  out  of  the  funds  in  the  hands 
of  their  receivers  or  agents.  The  receiver  deriving  his  ap- 
pointment and  authority  from  the  federal  court,  and  beino* 
charged  with  the  duty  of  operating  the  road  and  account- 
able to  that  court  for  the  proceeds,  these  proceeds  are 
beyond  the  jurisdiction  or  control  of  the  state  court.  The 
proper  course  for  the  plaintiff,  in  such  a  case,  would  seem  to 
be  either  to  apply  to  the  federal  court  for  leave  to  sue  the 


of  such  act,  it  is  provided  in  express 
terms  that  such  action  niay  be 
brought  against  the  railroad, 
whether  the  same  was  being  run 
by  the  company  or  by  a  lessee,  as- 
signee, receiver  or  other  person  in 
the  name  of  the  company.  The 
question  discussed  by  counsel  for 
appellant  therefore  resolves  itself 
into  the  question  of  whether  the 
legislature  of  this  state  possessed 
the  constitutional  power  to  pass  the 
above  recited  act.  The  corporate 
existence,  powers  and  franchises  of 
the  appellant  were  conferred  by 
the  legislature  of  this  state.  We 
have  carefully  examined  the  decree 
of  the  United  States  circuit  court 
for  the  district  of  Indiana,  appoint- 
ing Mr.  Chapman  receiver,  and 
find  nothing  therein  which  attempts 
to  take  away  the  corporate  exist- 
ence, powers  or  franchises  of  the 
appellant,  and  it  is  therefore  unnec- 
essary for  us  to  express  any  opinion 
as  to  the  power  of  the  federal 
judiciary  to  decree  a  forfeiture  of 
the  corporate  existence  and  fran- 
chises of  a  corporation  created  by 
a  sovereign  state.  The  whole  de- 
cree proceeds  upon  the  theory  that 


the  appellant  is  a  corporation  cre- 
ated and  existing  under  the  laws 
of  this  state.  The  whole  effect  of 
the  decree  is,  to  take  the  custody, 
control  and  management  of  such 
corporation  out  of  the  hands  of  the 
persons  who  were  controlling  and 
managing  the  same,  and  to  place 
the  same  into  the  custody  and 
under  the  control  and  management 
of  the  receiver  for  a  specified  time 
and  for  a  special  purpose.  The  cor- 
porate existence  of  the  appellant 
was  left  intact.  The  corporate 
powers  and  franchises  which  had 
been  exercised  by  the  officers  of 
the  company  were  conferred  for 
the  time  being  upon  the  receiver. 
The  power  and  authority  of  the  re- 
ceiver to  manage  and  control  the 
company  and  its  operations  de- 
pended upon  its  corporate  exist- 
ence. If  that  had  been  taken 
away,  the  power  and  authority  of 
the  receiver  would  have  ceased  and 
terminated,  for  no  court,  federal  or 
state,  can  confer  corporate  powers 
and  franchises  upon  an  individual. 
Such  powers  can  be  created  and 
conferred  by  the  legislative  depart- 
ment alone." 


352  RECEIVERS.  [CHAP.  XI. 

receiver,  or  for  an  order  on  the  receiver  to  pay  the  judg- 
ment recovered  in  the  state  court.1  And  in  an  action 
against  a  railway  company  to  recover  damages  for  personal 
injuries,  defendant  can  not  plead,  either  in  bar  or  in  abate- 
ment of  the  action,  that  at  the  time  of  beginning  the  suit 
the  company  was  in  the  hands  of  a  receiver,  since  the  ap- 
pointment of  the  receiver  does  not  impair  the  jurisdiction 
of  the  court  over  the  defendant  company,  or  over  the  sub- 
ject-matter of  the  action.2 

§  398.  It  has  already  been  shown,  that  receivers  of  rail- 
ways are  liable  to  actions  for  personal  injuries  incurred 
during  their  management  and  operation  of  the  road,  leave 
of  court  being  had  to  bring  the  action.3  It  is  not  to  be 
understood  that  their  liability  is  confined  to  this  class  of  ac- 
tions, and  it  may  be  affirmed,  generally,  that  they  are  liable 
as  common  carriers  for  negligence  in  the  performance  of 
their  duties,  and  an  action  for  damages  sustained  by  such 
negligence  will  lie  against  them  in  their  official  capacity. 
The  fact  that  they  were  acting  as  receivers,  under  appoint- 
ment from  a  court  of  chancery,  can  not  be  recognized  as  a 
defense  to  a  suit  at  law  for  breach  of  any  obligation  or  duty 
voluntarily  assumed  by  them  in  conducting  their  business 
as  such  receivers.  And  their  assumption  of  the  duties  and 
responsibilities  of  common  carriers  is  not  regarded  as  in- 
compatible with  any  duty  or  responsibility  imposed  upon 
them  as  receivers.4  Being  thus  held  liable  as  common  car- 
riers in  the  state  of  their  appointment,  such  receivers  may 
be  held  to  the  same  liability  in  another  state.  And  in  an 
action  brought  against  them  in  another  state  to  recover 
damages  for  loss  of  freight,  the  court  will  not  concede  to 
the  defendants  an  exemption  from  the  ordinary  liabilities  of 
common  carriers  more  extensive  than  is  allowed  them  in 
the  state  of  their  appointment,  and  in  which  the  loss  oc- 

i  Ohio   &    Mississippi  R.   Co.   v.  3  See  §  393,  ante. 

Fitch,  20  Ind.,  498.  4  Blumenthal  v.  Brainerd,  88  Vt., 

2  O.  &  M.  R.  Co.  v.  Nickless,  71  402 ;    Ex  parte  Brown,  15  S.  C, 

Ind.,  271.  518. 


CHAP.  XI.]  RAILWAYS.  35:) 

curred.  And  in  such  a  case,  the  ordinary  rule,  that  receiv- 
ers are  amenable  solely  to  the  court  appointing  them,  has 
been  held  to  be  inapplicable.1  But  while  the  cases  support- 
ing this  doctrine  are  believed  to  state  the  correct  rule  as  to 
the  liability  of  railway  receivers  as  common  carriers,  they 
are  not  to  be  accepted  as  authoritative  upon  the  right  to 
institute  such  actions  without  leave  of  the  court  appointing 
the  receiver,  since,  as  we  have  already  seen,  the  better  con- 
sidered doctrine,  and  that  supported  by  the  clear  weight  of 
authority,  requires  such  permission  before  the  action  may 
be  brought.2 

§  398  a.  An  action  may  be  maintained  against  the  re- 
ceiver, by  leave  of  court,  to  recover  damages  sustained  by 
plaintiff  by  the  construction  of  the  railway  through  his 
premises  without  making  compensation  therefor,  prior  to 
the  receiver's  appointment,  the  judgment,  when  recovered, 
to  be  satisfied  out  of  the  assets  in  the  receiver's  hands  under 
the  orders  of  the  court  appointing  him.3  But  a  contract  by 
which  a  railway  company  gives  to  an  express  company  the 
exclusive  right  to  transact  all  express  business  over  the  road 
for  a  given  period,  can  not  be  enforced  against  a  receiver 
afterward  appointed  in  foreclosure  proceedings  against  the 
railroad.  Such  a  contract  gives  no  lien  upon  the  property 
of  the  company,  and  its  specific  performance  by  the  re- 
ceiver would  be  only  a  form  of  payment  or  satisfaction 
which  he  can  not  be  required  to  make.4 


1  Paige  v.  Smith,  99  Mass.,  395.  receiver,  to  recover  for  the  death 

2  See  §  395  a,  ante.  In  Davies  v.  of  plaintiff's  intestate  upon  a  train 
Lathrop,  20  Blatchf.,  397,  it  is  held  operated  by  the  receiver  in  New 
that  when  a  citizen  of  New  Jersey  Jersey,  the  receiver  will  be  regarded 
is  appointed  receiver  over  a  rail-  as  a  citizen  of  New  Jersey,  and 
way  corporation  of  that  state,  and  the  cause  may,  therefore,  be  re- 
afterward,  by  an  ancillary  proceed-  moved  to  the  United  States  court 
ing  in  New  York,  he  is  appointed  in  New  York. 

receiver  over  the  property  of  the  J  Combs  v.  Smith,  78  Mo.,  32. 

company  in  that  state,  and  an  action  4  Express  Co.  v.  Railroad  Co.,  99 

is  brought  by  citizens  of  New  York,  TJ.  S.,  191. 
in  a  court  of  that  state,  against  the 
23 


354  RECEIVERS.  [chap.  XI. 

§  39S  h.  After  the  discharge  of  the  receiver,  no  action 
can  be  maintained  against  him  to  recover  for  personal  in- 
juries sustained  by  the  negligence  of  his  employees,  since  he 
can  not  be  made  personally  liable  for  their  torts.1  If,  how- 
ever, the  purchaser  at  the  foreclosure  sale  acquires  the  prop- 
erty subject  to  all  demands  against  the  receiver,  the  court 
still  retaining  jurisdiction  of  the  cause  for  the  purpose  of 
enforcing  payment  of  such  demands,  it  may  entertain  a  peti- 
tion against  the  purchaser  to  recover  for  personal  injuries 
sustained  during  the  receiver's  operation  of  the  road.2  And 
in  such  case,  a  judgment  for  such  cause  of  action  being 
by  the  laws  of  the  state  made  a  lien  upon  the  railway,  the 
judgment  may  be  established  as  a  lien  after  the  road  has 
passed  into  the  hands  of  purchasers.3  But  when  the  road  is 
sold,  subject  to  the  payment  of  all  liabilities  incurred  by  the 
receiver  in  its  operation,  a  bill  in  equity  can  not  be  main- 
tained against  the  purchasers  to  recover  damages  for  injuries 
sustained  during  the  receivership,  since  equity  will  not 
assume  jurisdiction  of  a  controversy  for  the  recovery  of  un- 
liquidated damages  in  tort.4  Such  a  purchaser,  however, 
having  purchased  subject  to  all  liabilities  growing  out  of  the 
receiver's  operation  of  the  road,  is  liable  in  an  action  at  law 
for  the  recovery  of  such  damages,  the  injury  having  been 
caused  by  the  negligence  of  the  receiver's  employees.5  And 
when  the  foreclosure  sale  is  had  expressly  subject  to  all  in- 
debtedness incurred  by  the  receiver,  which  is  declared  to  be 
a  lien  upon  the  property  prior  to  that  of  the  mortgages,  the 
purchasers  covenanting  to  pay  all  damages  and  liabilities  in- 
curred by  the  receiver,  or  which  should  have  been  paid  out 
of  the  property,  the  purchasers  are  liable  for  the  payment 
of  a  judgment  recovered  against  the  receiver  on  account  of 

'Davis  v.  Duncan,  19  Fed.  Rep.,  Central  Eailroad,  17 Fed.  Rep.,  758; 

477;  Farmers  Loan  &  Trust  Co.  v.  S.  C,  5  McCrary,  421. 
Central  Railroad,  7  Fed.  Rep.,  537.        4 Brown  v.   Wabash  R.   Co.,   96 

2  Farmers  Loan  &  Trust  Co.  v.  111.,  297. 

Central  Railroad,  17  Fed.  Rep.,  758.        s  Sloan  v.  Central  Iowa  R.  Co.,  62 

3  Farmers  Loan  &  Trust  Co.  v.    Iowa,  728. 


CHAP.  XI.]  RAILWAYS.  355 

the  death  of  plaintiff's  intestate  while  the  road  was  operated 
by  the  receiver.  In  such  case,  the  judgment  creditor  may 
maintain  an  action  against  the  purchasers  for  the  recovery 
of  the  judgment,  or  to  establish  a  lien  upon  the  property 
and  for  its  sale  in  satisfaction  of  the  judgment.1  So  when 
property  is  purchased  and  paid  for  out  of  the  receiver's  in- 
come, and  is  delivered  to  the  company  upon  the  surrender 
back  of  the  road  at  the  termination  of  the  receivership,  such 
property  is  liable  in  equity  for  damages  sustained  by  inju- 
ries while  the  road  was  operated  by  the  receiver,  when  the 
rights  of  third  persons  have  not  intervened,  the  liability,  in 
such  case,  being  based  upon  the  diversion  of  income  by  the 
receiver.2 

i  Schmid  v.  N.  Y.,  L.  E.  &  W.  R.  G.  N.  R.  Co.  v.  Ormond,  62  Tex., 

Co.,  32  Hun,  335.    And  see  Ryan  274. 

v.  Hays,  62  Tex.,  42;   Hicks  v.  I.  2 Mobile  &  Ohio  R.  Co.  v.  Davis, 

&  G.  N.  R.  Co.,  62  Tex.,  38;  I.  &  62  Miss.,  271. 


35G  RECEIVERS,  [CHAP.  XI. 


YI.  Receivers'  Certificates. 

§  398  c.  Receivers'  certificates  sustained  by  authority. 
398  d.  Purposes  for  which  issued ;  order  strictly  construed ;  notice. 
398  e.  Not  commercial  paper ;  innocent  holders  not  protected ;  pur- 
chasers charged  with  notice  of  order. 
398/.  When  bondholder  estopped  from  questioning  validity. 
398 g.  Sale  of  road  subject  to  certificates;  purchaser  concluded ;  me- 
chanic's hen. 

§  398  c.  In  actions  for  the  foreclosure  of  railway  mort- 
gages, a  practice  has  grown  up  in  recent  years  of  authorizing 
the  receiver  appointed  in  the  foreclosure  proceedings  to  issue 
debentures  or  certificates  of  indebtedness  for  the  purpose  of 
raising  money  to  procure  materials,  labor,  supplies  and  roll- 
ing stock,  for  the  maintenance  and  repair  of  the  road,  and 
in  some  instances  for  completing  an  unfinished  fine  or  for 
making  extensions  of  an  existing  line  of  road.  These  certifi- 
cates are,  by  the  order  of  the  court,  declared  to  be  a  first  lien 
upon  the  entire  property,  income  and  franchises  of  the  rail- 
way company,  and  such  order  is  usually  recited  in  the  body 
of  the  certificate  itself.  In  cases  where  resort  is  had  to  this 
method  of  raising  money,  the  income  of  the  receivership  be- 
ing generally  inadequate  to  the  payment  of  the  certificates, 
they  are  usually  paid  out  of  the  proceeds  of  foreclosure,  be- 
fore a  distribution  to  the  mortgage  bondholders.  The 
power  to  thus  create  a  new  lien  or  mortgage  upon  the  prop- 
erty, and  to  give  it  priority  over  existing  mortgages,  marks 
the  extreme  limit  which  courts  of  equity  have  thus  far  at- 
tained in  the  exercise  of  their  extraordinary  jurisdiction. 
It  can  hardly  be  questioned  that  the  exercise  of  such  a  power 
impairs  the  obligation  of  the  mortgage  contract,  and  fre- 
quently results  in  the  diversion  of  a  large  portion  of  the 
mortgage  security.  A  power  so  dangerous  because  so  limit- 
less can  not  be  sustained  upon  any  just  principles  of  legal 
reasoning.  Nevertheless,  as  was  said  upon  the  question  of 
preferring  payment  of  operating  expenses  prior  to  the  receiv- 


CHAP.  XI.]  RAILWAYS.  357 

ership,  as  against  the  lien  of  mortgage  bondholders,  this 
branch  of  the  jurisdiction  is  so  well  established  upon  author- 
ity that  its  existence  is  no  longer  open  to  question.1  The 
exercise  of  the  jurisdiction  is  justified  upon  the  principle 
that  the  court  having  taken  under  its  charge  the  property 
of  the  railway  company  as  a  trust  fund  for  the  payment  of 
incumbrances,  it  may  authorize  its  receivers  to  raise  money 
necessary  for  the  preservation  and  management  of  the  prop- 
erty, and  may  charge  the  same  as  a  lien.thereon,  when  nec- 
essary for  the  preservation  of  the  trust  estate.2  The  exercise 
of  the  power  is  also  justified  from  the  peculiar  nature  of 
railway  property  and  from  the  necessity  of  continuing  it  in 
operation  as  a  "  going  concern,"  pending  foreclosure  pro- 
ceedings, as  well  as  for  the  preservation  and  protection  of 
the  interests  of  the  public.3  The  jurisdiction  is  to  be  exer- 
cised with  extreme  caution,  and,  if  possible,  with  the  consent 
or  acquiescence  of  the  parties  in  interest.  And  when  the 
certificates  have  thus  been  issued,  either  with  the  consent  of 
the  bondholders,  or  without  objection  on  their  part,  they 
will  be  enforced  as  a  prior  lien  upon  the  property,  and  wTill 
be  paid  out  of  the  proceeds  of  foreclosure,  before  payment 
to  the  bondholders.4 

1  Wallace  v.  Loomis,  97  U.  S.,  procure  such  rolling  stock  as  might 
146;  Meyer  v.  Johnston,  53  Ala.,  be  necessary;  and,  for  these  pur- 
237;  Hoover  v.  M.  &  G.  L.  R.  Co.,  poses,  to  raise  money  by  loan  to  an  < 
29  N.  J.  Eq.,  4;  Taylor  v.  P.  &  R.  amount  named  in  the  order,  and 
R.  Co.,  7  Fed.  Rep.,  377;  Bant  of  issue  then  certificates  of  indebted- 
Montreal  v.  C.  C.  &  VV.  R.  Co.,  48  ness  therefor;  and  the  order  de- 
lowa.  Z':<:  Kennedy  v.  St.  Paul  &  clared  that  such  loan  should  be  a 
Pacific  R.  Co.,  2  Dill.,  448 ;  S.  C,  5  first  lien  upon  the  property,  payable 
Dill..  519.  before  the  first  mortgage   bonds. 

-Wallace  v.  Loomis,  97  U.  S.,  146.  The  power  of  a  court  of  equity  to 

3  Meyer  v.  Johnston,  53  Ala.,  237.  appoint  managing  receivers  of  such 

4  Wallace  w.  Loomis,  97  U.  S.,  146.  property  as  a  railroad,  when  taken 
Mv.  Justice  Bradley,  delivering  the  under  its  charge  as  a  trust  fund  for 
opinion  of  the  court,  says,  p.  162 :  the  payment  of  incumbrances,  and 
"  The  receivers  were  authorized  by  to  authorize  such  receivers  to  raise 
the  order  appointing  them,  amongst  money  necessary  for  the  preserva- 
other  things,  to  put  the  road  in  re-  tion  and  management  of  the  prop- 
pair  and  operate  the  same,  and  to  erty,  and  make  the  same  chargeable 


358  RECEIVERS.  [CHAP.  XI. 

§  39S  d.  Xo  limit  has  been  fixed  as  to  the  purposes  for 
which  receivers'  certificates  may  be  issued,  other  than 
that  they  shall  be  germane  to  the  objects  of  the  receiver- 
ship and  necessary  to  the  proper  administration  of  the  trust. 
Thus,  they  have  been  authorized  for  the  preservation,  man- 
agement and  repair  of  the  road,  and  for  the  purchase  of 
rolling  stock; !  for  the  making  of  repairs  only;2  for  the  fur- 
ther construction,  equipment  and  final  completion  of  the 
road ; 3  to  complete  an  unfinished  portion  of  the  road  within 
the  time  fixed  by  law,  and  thus  to  prevent  the  lapsing  of 
valuable  land  grants  and  franchises  of  the  company ; 4  for 
the  improvement,  repair  and  operation  of  the  road ; 5  to  pro- 
cure rolling  stock,  machinery  and  necessary  supplies,  and  to 
repair  and  operate  the  road,6  and  in  payment  for  labor,  ma- 
terials, supplies  and  taxes  due  prior  to  the  receivership.7 
The  issue  of  the  certificates  is,  however,  confined  strictly  to 
the  purposes  expressed  in  the  order,  and  these  purposes  can 
not  be  extended  by  implication.  And  when  the  receiver  is 
authorized  to  issue  certificates  as  material  is  furnished  and 
labor  performed  in  extending  the  road,  not  to  exceed  a 
given  amount  per  mile,  he  can  not  issue  them  in  advance  of 
the  actual  performance  of  the  labor  or  furnishing  of  the 
materials.8    ISTor  will  they  be  issued  without  notice  to  all 

as  a  lien  thereon  for  its  repayment,        2  Hoover  v.  M.  &  G.  L.  R.  Co.,  29 

can  not,  at  this  day,  be  seriously  N.  J.  Eq.,  4. 

disputed.     It  is  a  part  of  that  juris-        3  Bank  of  Montreal  v.  C,  C.  &  W. 

diction,    always  exercised   by  the  R.  Co.,  48  Iowa,  518;  Bank  of  Mon- 

court,  by  which  it  is  its  duty  to  treal  v.  Thayer,  7  Fed.  Rep.,  622. 

protect  and  preserve  the  trust  funds        4  Kennedy  v.  St.  Paul  &  Pacific 

in  its  hands.     It  is,  undoubtedly,  R.  Co.,  2  Dill.,  448;  S.  C,  5  Dill., 

a  power  to  be  exercised  with  great  519. 

caution;  and,  if  possible,  with  the        5 Turner  v.  P.  &  S.  R.  Co.,  95  111., 

consent  or  acquiescence  of  the  par-  134;  Stanton  v.  A.  &  C.  R.  Co.,  2 

ties  interested  in  the  fund.     In  this  Woods,  506. 

case  it  appears    that    the    parties        6Swann  v.  Clark,  110  U.  S.,  602. 

most  materially  interested   either        "Humphreys  v.  Allen,    101  111., 

expressly  consented  to  the  order,  or  490 ;  Taylor  v.  P.  &  R.  R.  Co.,  7  Fed. 

offered  no  objection  to  it."  Rep.,  377. 

HVallace  v.   Loomis,   97  U.  S.,        *  Bank  of  Montreal  v.  C,  C.  &  W. 

146.  R.  Co.,  48  Iowa,  518. 


CHAP.  XI.]  RAILWAYS.  359 

parties  in  interest,  or  without  a  full  hearing  as  to  the  neces- 
sity for  the  proposed  expenditure,1  or  at  a  higher  rate  of 
interest  than  that  allowed  by  law.2  But  notice  to  the  trustee 
of  mortgage  bondholders,  of  the  application  for  leave  to 
issue  the  certificates,  will  be  treated  as  notice  to  the  bond- 
holders, the  trustee  being  regarded  for  such  purposes  as  the 
representative  of  the  bondholders.3 

§  398  <?.  Eeceivers'  certificates,  being  merely  an  evidence 
of  indebtedness  issued  for  a  special  purpose,  under  a  judi- 
cial order,  and  payable  out  of  a  special  fund,  are  not  nego- 
tiable instruments  or  commercial  paper  in  the  sense  that 
innocent  purchasers  for  value  will  be  protected  as  against 
the  equities  existing  between  the  original  parties.  And 
while  they  may  be  transferred  by  assignment,  or  even  by 
delivery  if  payable  to  bearer,  the  purchaser  or  assignee  can 
only  recover  upon  them  to  the  extent  that  the  original 
payee  could  have  recovered.4  It  follows,  therefore,  that  the 
assignor  or  indorser  of  such  certificates  is  not  liable  as  a 
guarantor  or  indorser  of  commercial  paper,  nor  does  the 
assignment  import  a  warranty  that  the  certificates  are  col- 
lectible and  will  be  paid.5  And  while  persons  who  advance 
money  upon  the  faith  of  the  certificates  are  not  bound  to 
see  to  its  application  by  the  receiver,  they  can  only  enforce 
the  certificates  out  of  the  proceeds  of  foreclosure  to  the 
extent  of  the  money  actually  advanced  to  the  receiver.6  So 
it  is  held  that  the  negotiation  and  sale  of  the  certificates  is 
a  trust  personal  to  the  receiver,  which  he  can  not  delegate  to 
an  agent.  And  when  one  has  purchased  the  certificates 
from  an  agent  or  broker  of  the  receiver  at  a  lame  discount, 
the  agent  not  accounting  to  the  receiver  for  the  proceeds, 

i  Ex  parte  Mitchell,  12  S.  C.,  83;  v.  A.  &  C.  R.  Co.,  2  Woods,  506; 

Meyer  v.  Johnston,  53  Ala.,  237.  Union  Trust  Co.  v.  C.  &  L.  H.  R. 

2  Meyer  v.  Johnston,  53  Ala.,  237.  Co.,  7  Fed.  Rep.,  513;  McCurdy  v. 

3  Wallace  v.   Loomis,   97  U.  S.,  Bowes,  88  Ind.,  583. 

146.  5 McCurdy    v.    Bowes,    88    Ind., 

4  Turner  v.  P.  &  S.  R.  Co.,  95  111.,     583. 

134;  Bank  of  Montreal  v.  C,  C.  &  « Stanton  v.  A.  &  C.  R.  Co.,  2 
W.  R.  Co.,  48  Iowa,  518;  Stanton    Woods,  506. 


3G0  RECEIVERS.  [CHAP.  XI. 

the  purchaser  can  not  enforce  the  certificates.1  So  the  cer- 
tificates referring  upon  their  face  to  the  order  under  which 
they  are  issued,  a  purchaser  is  chargeable  with  notice  of  the 
terms  of  such  order,  and  is  hound  to  know  at  his  peril 
whether  they  are  issued  in  accordance  with  its  terms  and 
conditions.2  And  certificates  issued  in  excess  of  the  amount 
authorized  by  the  court  are  void,  even  in  the  hands  of  inno- 
cent holders,  and  will  not  be  awarded  priority  of  payment 
out  of  the  funds  of  the  receivership.  But  when  money  is 
advanced  in  good  faith  upon  such  an  overissue  of  certifi- 
cates, and  is  used  by  the  receiver  in  payment  of  overdue 
coupons  for  interest  upon  the  mortgage  indebtedness,  the 
persons  advancing  such  money  may  be  subrogated  to  the 
rights  of  the  coupon  holders,  and  may  receive  the  propor- 
tion due  to  such  coupons  out  of  the  proceeds  of  the  fore- 
closure sale,  upon  final  distribution.3  If,  however,  a  receiver 
executes  and  places  upon  the  market  certificates  containing 
false  and  fraudulent  representations  intended  to  deceive 
purchasers,  the  receiver  is  personally  liable  in  an  action  for 
damages  brought  by  one  who  purchases  the  certificates  in 
good  faith  and  relying  upon  such  representations.4 

§  398/1  Although,  as  has  already  been  shown,  receivers' 
certificates  are  not  negotiable  instruments,  yet  when  a  re- 
ceiver in  foreclosure  proceedings  is  authorized  to  issue  them 
in  payment  for  operating  expenses,  rentals,  taxes  and  im- 
provements incurred  before  his  appointment,  a  bondholder 
desiring  to  question  their  validity  and  priority  of  hen  should 
do  so  before  they  are  issued  and  sold.  And  if,  with  full 
knowledge  of  all  the  facts,  he  permits  them  to  be  sold  with- 
out objection,  he  and  those  claiming  under  him  with  full 
notice  of  such  facts,  can  not  afterward  be  heard  to  question 
the  payment  of  the  certificates  in  full  out  of  the  proceeds 


i  Union  Trust  Co.  v.  C.  &  L.  H.  ^Newbold  v.  P.  &  S.  R.  Co.,  5 

R.  Co.,  7  Fed.  Rep.,  513.  Bradw.,  367. 

2  Bank  of  Montreal  v.  C,  C.  &  W.  « Bank  of  Montreal  v.  Thayer,  7 

R.  Co.,  48  Iowa,  518.  Fed.  Rep.,  622. 


CHAP.  XI. J  BAILWAYS.  361 

of  the  foreclosure  sale,  prior   to  distribution  among  the 
bondholders.1 

§398^.  When  receivers' certificates  are  issued  in  fore- 
closure proceedings  as  a  fir§t  lien  upon  all  the  property  of 
the  railway  company,  to  be  paid  before  the  mortgage  bond- 
holders out  of  the  proceeds  of  the  sale,  and  the  property  is 
sold  expressly  subject  to  such  liens  and  to  all  liabilities  in- 
curred by  the  receiver,  a  decree  in  a  subsequent  suit  brought 
by  the  holders  of  the  certificates,  declaring  them  to  be  a  first 
lien  upon  the  property  to  the  extent  of  the  money  actually 
advanced  to  the  receiver  thereon,  will  be  upheld  as  against 
the  purchaser  at  the  foreclosure  sale.2  In  such  case,  the 
purchaser  having  acquired  his  title  subject  to  all  such  liens 
and  priorities  as  may  be  allowed  by  the  court  prior  to  the 
mortgage  indebtedness,  can  not,  after  such  liens  have  been 
established  in  the  foreclosure  proceedings,  maintain  a  new 
action  to  dispute  their  validity,  the  parties  in  interest  in  the 
former  suit  having  been  fully  heard  in  the  proceeding  to 
establish  the  validity  and  priority  of  such  prior  liens.3  If, 
however,  the  railway  is  sold  to  satisfy  the  certificates,  such 
sale  will  not  divest  a  mechanic's  hen  claimed  by  a  creditor 
for  the  construction  of  the  road,  who  has  instituted  pro- 
ceedings to  enforce  his  lien  before  the  appointment  of  the 
receiver,  and  who  was  not  made  a  party  to  the  suit  in  which 
he  was  appointed  and  in  which  the  property  was  sold.  In 
such  case,  the  receiver  in  no  manner  represents  the  creditor 
claiming  such  lien,  and  the  property  is  therefore  regarded 
as  having  been  sold  subject  to  his  lien.4 

i  Humphreys  v.  Allen,  101   111.,  2  Swarm  v.  Clark.  1 10  U.  S.,  602. 

490.    See,  also,  Langdon  v.  Ver-  s  Swann  v.  Wright's  Ex'r,  110  U. 

niont  &  Canada  R.   Co.,   53  Vt.,  S.,  590. 

228.  *  Snow  v.  Window,  54  Iowa,  200. 


CHAPTER  XII. 

OF  RECEIVERS  IN  AID  OF  JUDGMENT  CREDITORS. 

I.  Principles  on  Which  the  Relief  is  Granted,    ....    §  399 

II.  Of  the  Receiver's  Title, 440 

III.  Of  the  Receiver's  Functions  and  Rights  of  Action,     .       453 


I.  Principles  on  Which  the  Relief  is  Granted. 

399.  The  jurisdiction  of  English  origin ;  inadequacy  of  legal  remedy 

the  ground  for  relief. 

400.  American  law  shaped  by  New  York  courts ;  no  answer  to  appli- 

cation that  defendant  has  no  property;  duty  of  creditor  to 
apply  for  receiver. 

401.  Supplementary  proceedings  under  New  York  code;    receiver 

granted  almost  as  of  course. 

402.  Judgment  creditor  must  be  diligent  in  assertion  of  his  rights ; 

effect  of  delay  as  a  bar  to  relief 

403.  Plaintiff  must  fully  exhaust  his  remedy  at  law;  receiver  not 

granted  when  execution  may  be  satisfied  in  the  ordinary  way. 
403  a.  Receiver  not  appointed  to  collect  municipal  tax  in  aid  of  judg- 
ment creditor. 

404.  Receiver  can  not  be  appointed  on  sheriff's  return  of  execution 

nulla  bona  before  its  return  day. 

405.  Receiver  of  joint  property  of  two  defendants  on  judgment  ren- 

dered against  one;   omission  in  direction  of    execution   to 
sheriff. 

406.  Receiver  not  granted  in  aid  of  general  creditor  before  judgment ; 

illustrations  of  the  rule. 

407.  Apparent  exception  to  the  rule  in  New  York  in  cases  of  partner- 

ships ;  receiver  allowed  before  judgment. 

408.  Lien  of  creditors  who  have  advanced  money  for  repairing  vessel, 

when  protected  by  receiver. 

409.  Receiver  over  effects  of  married  woman  doing  business  as  trader, 

in  action  to  charge  her  individual  property. 

410.  Creditor  holding  annuity  which  is  a  charge  on  real  estate  may 

have  receiver  when  amiuity  is  in  arrears. 

411.  Fraudulent  assignment  by  debtor  ground  for  receiver ;  appoint- 

ment of  receiver  does  not  determine  rights  of  assignee. 


CHAP.  XII.]  CKEDITOKS.  363 

§  412.  Receiver  granted  to  carry  out  assignment  by  debtor  for  benefit 
of  creditors,  on  refusal  of  assignee  to  act,  or  on  bis  miscon- 
duct. 

413.  No  bar  to  tbe  relief  that  property  is  claimed  by  adverse  claim- 

ants. 

414.  .Answer  denying  property  no  bar  to  reference  to  master  to  ap- 

point ;  receiver  not  appointed  to  attack  fraudulent  assignment 
which  creditor  can  set  aside. 

415.  Practice  on  reference  to  master  to  appoint  under  New  York 

system ;  assignment  to  receiver ;  examination  of  debtor,  pur- 
pose and  extent  of. 

416.  Courts  averse  to  interfering  when  contest  is  as  to  title  of  real 

estate  claimed  by  third  persons. 

417.  Buildings  erected  by  debtor  with  his  own  funds,  receiver  ap- 

pointed over  rents. 

418.  Receiver  allowed  over  realty  in  first  instance  under  English  prac- 

tice; infant  heirs;  rights  of  judgment  creditors  in  possession 
not  affected. 

419.  Receiver  not  appointed  on  creditors'  bill,  as  against  mortgagee  in 

possession ;  different  mortgages ;  inadequate  security. 

420.  Receiver  in  aid  of  judgment  creditors  as  against  mortgagee  of 

chattels. 

421.  Judgment  creditors  may  maintain  action  to  set  aside  fraudulent 

mortgage;  rights  of  judgment  creditor  in  England. 

422.  Real  estate  in  receiver's  possession  can  not  be  sold  under  another 

judgment. 

423.  Priority  as  between  purchasers  of  real  estate  at  receiver's  sale 

and  at  sheriff's  sale. 

424.  The  same ;  receiver  acquires  real  property  subject  to  judgment 

liens. 

425.  Discharge  in  bankruptcy,  when  no  defense  to  creditors'   bill 

seeking  receiver. 

426.  Receiver  under  English  bankrupt  act  of  1861. 

427.  Receiver  refused  on  creditors'  bill  when  his  appointment  would 

interfere  with  administration  of  estate  of  deceased. 

428.  Relief  granted  against  judgment  debtor  doing  business  in  name 

of  wife ;  error  to  pay  creditors  before  priority  determined. 

429.  Discretion  of  court  as  to  amount  of  defendant's  property  over 

which  receiver  will  be  extended ;  discretion  as  to  sale ;  receiver 
extended  for  other  creditor. 

430.  Creditor  not  entitled  to  priority  over  interest  duo  on  mortgages 

prior  to  his  judgment. 

431.  Appointment  after  bill  dismissed  on  demurrer. 

432.  Nature  of  property  subject  to  receivership ;  rings  and  jewelry ; 

notes  and  interest  in  firm ;  benefice  of  clergyman. 


364  EECEIVEKS.  [CHAP.  XII. 

§  433.  Relief  refused  when  answer  alleges  nothing  due  to  plaintiff ;  de- 
lay to  determine  regularity  of  proceedings. 

434.  Waiver  of  answer  under  oath  no  ground  of  objection. 

435.  When  defendant  directed  to  pay  fund  into  court. 

436.  Courts  averse  to  interfering  on  ex  parte  application. 

437.  Prior  creditors  protected,  notwithstanding  dismissal  of  bill. 

438.  Receiver  in  divorce  proceedings  to  enforce  decree  for  alimony. 

439.  Relief  granted  when  only  security  for  judgment  is  a  life  estate. 

§  399.  No  branch  of  the  law  of  receivers  is  more  fre- 
quently invoked  in  this  country  than  that  which  governs 
the  jurisdiction  as  exercised  in  behalf  of  judgment  cred- 
itors, for  the  enforcement  of  their  judgments  in  cases  where 
the  usual  legal  remedies  have  been  exhausted,  and  when 
the  aid  of  equity  is,  therefore,  necessary  for  the  protection 
of  the  creditor.  The  jurisdiction  of  equity  by  the  appoint- 
ment of  receivers,  in  this  class  of  cases,  while  deriving  its 
origin  from  the  English  Court  of  Chancery,  has  been  more 
largely  shaped  and  developed  by  the  decisions  of  American 
courts,  than  has  any  other  branch  of  the  law  under  consid- 
eration. The  fundamental  principle  upon  which  it  rests  is 
the  inadequacy  of  the  legal  remedy,  and  the  consequent 
necessity  for  the  aid  of  equity  to  supplement  the  remedy  at 
law.  This  principle  may  be  traced  back  through  all  the 
adjudications  upon  the  subject,  and  it  was  said  by  Lord 
Eldon,  to  have  been  long  settled,  that  when  a  judgment 
creditor  took  out  execution,  and  found  the  estate  of  his 
debtor  protected  by  circumstances  respecting  a  prior  title, 
he  might  apply  for  a  receiver,  and  that  the  fact  that  the 
creditor  could  not  execute  his  judgment  at  law  would  en- 
title him  to  a  receiver  of  the  debtor's  estate.1  The  same 
principle,  it  is  believed,  will  be  found  to  underlie  most  of 
the  decisions  in  this  country  upon  this  topic,  and  it  may  be 
regarded  as  the  foundation  of  the  entire  jurisdiction  of 
equity  in  appointing  receivers  in  creditors1  suits.2 

1  See  Curling  v.  Marquis  Town-  lect  taxes  due  to  a  municipal  cor- 
shend,  19  Ves.,  628.  poration  and  to  apply  them  in  pay- 

2  As  to  the  power  of  a  court  of  ment  of  the  indebtedness  of  such 
equity  to  appoint  a  receiver  to  col-  corporation,  at  the  suit  of  its  cred- 


CHAP.  XII.]  CREDITORS.  3G5 

§  400.  The  American  law  upon  this  subject  has  been 
very  largely  shaped  by  the  decisions  of  the  New  York 
courts,  both  under  the  former  chancery  practice  in  that 
state,  and  under  the  code  of  procedure  by  which  the  former 
system  was  succeeded.  Under  the  practice  of  the  New  York 
Court  of  Chancery,  the  appointment  of  receivers  on  cred- 
itors' bills,  after  return  of  execution  unsatisfied,  was  almost 
a  matter  of  course,  for  the  preservation  of  the  debtor's 
property  pending  the  litigation.1  And  it  was  held  that 
when  the  sworn  bill,  filed  by  the  judgment  creditor,  showed 
that  he  had  an  equitable  right  to  all  the  funds  and  property 
of  the  defendant  to  satisfy  his  debt,  if  this  right  was  not 
denied  by  defendant  in  answer  to  the  application  for  a  re- 
ceiver, no  reason  existed  why  the  appointment  should  not 
be  made.2  And  it  was  not  a  sufficient  answer  to  the  appli- 
cation to  say  that  there  was  no  property  to  protect  belong- 
ing to  defendant,  since,  in  such  case,  he  could  suffer  no 
injury,  and  plaintiff  proceeded  at  the  peril  of  his  costs.3 

itors,  its  charter  having  been  re-  are  principally  used,  and  in  which 
voked  by  the  legislature,  see  Meri-  many  things  have  occurred  to  ren- 
wether  v.  Garrett,  102  U.  S.,  472;  der  them  the  mere  puppets  of  the 
Garrett  v.  City  of  Memphis,  5  Fed.  complainant  in  the  particular  suit. 
Rep.,  860.  One  cause  of  this  has  been  the  dif- 
1  See  Bloodgood  v.  Clark,  4  Paige,  ficulty  of  procuring  persons  to  ac- 
574 ;  Osborn  v.  Heyer,  2  Paige,  342 ;  cept  the  appointment,  and  give  the 
Fitzhurgh  v.  Everingham,  6  Paige,  security  requisite,  where  the  pros- 
29;  Bank  of  Monroe  v.  Schermer-  pect  of  assets  and  of  correspond- 
horn,  Clarke  Ch.,  214.  And  see  ing  compensation  was  often  doubt- 
Johnson  v.  Tucker,  2  Tenn.  Ch.,  ful,  if  not  desperate.  And  another 
398.  Indeed,  the  practice  seems  cause  was  the  practice  of  limiting 
to  have  been  more  liberal  than  was  the  assets  to  be  handed  over,  to  the 
at  all  times  consistent  with  the  es-  amount  of  complainant's  debt,  and 
tablished  principles  of  equity;  so  probable  costs,  where  he  had  the 
much  so,  at  least,  as  to  provoke  the  good  fortune  to  discover  more  than 
criticism  of  Vice-Chancel  lor  Sand-  his  own  debt  required." 
ford,  in  hidings  v.  Bruen,  4  Sandf.  -  Bloodgood  v.  Clark,  4  Paige, 
Ch.,  424.     "  Most  of  our  notions  of  574. 

a  receiver  at  this  day,"  says  the        3  Bloodgood  v.   Clark,   4   Paige, 

learned  judge,  "are  derived  from  574;  Browning  v.  Bettis,  8  Paige, 

the  course  and  practice  in  judg-  568.     The  practice  which  obtained 

ment  creditors'  suits,  where  they  under    the    New    York    Court    of 


366 


RECEIVERS. 


[CHAI>.  XII. 


The  court  proceeded  upon  the  theory  that,  after  the  defend- 
ant debtor  was  enjoined  from  interfering  with  or  disposing 
of  his  property  himself,  he  could  have  no  honest  motive  in 
resisting  the  appointment  of  a  receiver,  since,  if  he  had 
property,  it  was  for  his  own  interest  that  it  should  be  pre- 
served pending  the  litigation,  and  if  he  had  none,  there  was 
nothing  for  the  receiver  to  do,  arid  plaintiff  was  liable  for 
costs.1  And  it  was  held  to  be  the  duty  of  the  judgment 
creditor,  after  filing  his  bill  to  reach  the  equitable  assets  of 
his  debtor,  and  obtaining  an  injunction  to  restrain  the 
debtor  from  interfering  therewith,  to  apply  to  the  court 
within  a  reasonable  time  for  a  receiver  of  the  debtor's  assets, 
in  order  to  prevent  their  being  wasted,  and  to  secure  the 
collection  of  the  debts.2  And  in  such  case,  when  the  bill 
made  out  a  prima  facie  case  for  a  receiver,  it  was  regarded 


Chancery  was  stated  by  Chancellor 
Walworth,  in  Bloodgood  v.  Clark, 
as  follows,  p.  577 :  "In  these  cases 
of  creditors'  bills,  where  the  return 
of  the  execution  unsatisfied  pre- 
supposes that  the  property  of  the 
defendant,  if  any  he  has,  will  be 
misapplied,  and  entitles  the  com- 
plainant to  an  injunction  in  the 
first  instance,  it  seems  to  be  almost 
a  matter  of  course  to  appoint  a  re- 
ceiver to  collect  and  preserve  the 
property  pending  the  litigation. 
And  where  the  sworn  bill  of  the 
complainant  shows  that  he  has  an 
equitable  right  to  all  the  funds  and 
property  of  the  defendant  to  sat- 
isfy his  debt,  if  the  right  of  the 
complainant  is  not  denied  by  the 
defendant,  in  answer  to  the  appli- 
cation for  a  receiver,  there  can  be 
no  good  reason  why  the  complain- 
ant should  not  have  a  receiver  ap- 
pointed to  preserve  the  property 
from  waste  or  loss.  Indeed,  this 
court  has  already  declared  that  it 
is  the  duty  of  a  complainant  who 


has  obtained  an  injunction  upon 
such  a  bill,  restraining  the  defend- 
ant from  collecting  his  debts  or 
disposing  of  property  which  might 
be  liable  to  waste  or  deterioration, 
to  apply  to  the  court  and  have  a 
receiver  appointed  without  any  un- 
reasonable delay.  (See  Osborn  v. 
Heyer,  2  Paige,  343.)  It  is  no  suf- 
ficient answer  to  such  an  applica- 
tion to  say  there  may  not  be  any 
property  to  protect,  as  the  com- 
plainant proceeds  at  the  peril  of 
costs,  if  there  is  no  property.  And 
if  there  is  nothing  for  the  receiver 
to  take,  the  defendant  can  not  be 
injured  by  the  appointment."  See, 
also,  Fuller  v.  Taylor,  2  Halst.  Ch., 
301.  But  see,  contra,  Dollard  v. 
Taylor,  33  N.  Y.  Supr.  Ct.  P.,  496. 

iFitzburgh  v.  Everingham,  6 
Paige,  29. 

2  Bank  of  Monroe  v.  Schermer- 
horn,  Clarke  Ch.,  214;  Osborn  v. 
Heyer,  2  Paige,  342.  See,  also, 
Bloodgood  v.  Clark,  4  Paige,  574. 


CHAP.  XII.]  CREDITORS.  367 

as  no  objection  to  the  appointment  that  the  defendant  had 
not  yet  answered.1 

§  401.  Under  the  New  York  code  of  procedure,  as  well 
as  in  many  of  the  states  which  have  adopted  the  code  prac- 
tice from  New  York,  provision  is  made  for  the  appointment 
of  receivers  on  proceedings  by  judgment  creditors  "  supple- 
mentary to  execution,"  which  proceedings  have  taken  the 
place  of  the  former  creditors'  bill.  Indeed,  the  appointment 
of  a  receiver  on  supplementary  proceedings  under  the  code 
of  procedure,  is  regarded  merely  as  a  substitute  for  the 
proceedings  had  for  the  same  purpose  under  the  former 
chancery  practice.2  And  an  examination  of  the  New  York 
decisions,  in  this  class  of  cases,  will  show  that  the  courts  of 
that  state  are  still  governed  by  the  principles  established 
under  the  former  practice,  in  administering  this  species  of 
relief  in  behalf  of  judgment  creditors.  Under  the  present 
system,  the  appointment  of  a  receiver  of  the  effects  of  a  judg- 
ment debtor,  on  supplementary  proceedings,  has  become 
almost  a  matter  of  course ;  as  much  so,  indeed,  as  it  for- 
merly was  on  creditors'  bills  under  the  chancery  practice.3 
The  object  of  the  proceeding  under  the  code  is  to  compel 
the  application  of  property  concealed  by  the  debtor,  or  which 
from  its  nature  can  not  be  levied  upon  under  execution,  to 
the  payment  of  the  creditor's  judgment.  And  the  remedy 
is  regarded  as  a  cumulative  one,  and  would  seem,  therefore, 
to  extend  to  property  which  might  be  the  subject  of  levy 
and  sale  under  execution.4     So  in  Minnesota,  upon  proceed- 

JBank  of  Monroe  v.  Schermer-  courts  in  appointing  them,  and  of 

horn,  Clarke  Ch.,  214.  the  practice  and  procedure,  under 

-  Spencer  v.  Cuyler,  9  Ab.  Pr.,  the   code  of    procedure  of    North 

382;  People  v.  Mead,  29  How.  Pr.,  Carolina. 

360.     And  see  this  case,  generally,  3Heroy  v.  Gibson,  10  Bosw.,  591. 

for  a  statement  of  the  practice  and  See,  also,  Coates  v.  Wilkes,  92  N. 

procedure  in  appointing  receivers  C.,  376;  Flint  v.  Webb,  25  Minn., 

in  this  class  of  proceedings  under  263. 

the  code.  And  see  Coates  v.  Wilkes,  4Heroy  v.  Gibson,  10  Bosw.,  591. 

92  N.  C,  376,  for  a  full  discussion  As  to  the  rigbt  to  a  receiver,  under 

of  the  functions  of  such  receivers,  the  New  York  code,  in  an  action 

of   the    principles    governing   the  by  a  judgment  creditor  to  recover 


368  RECEIVERS.  [CHAI\  XII. 

ings  supplementary  to  execution,  a  receiver  may,  in  the  dis- 
cretion of  the  court,  be  appointed  immediately  upon  the 
granting  of  an  order  for  the  examination  of  the  judgment 
debtor,  this  being  regarded  as  the  better  practice,  since  the 
judgment  creditor  thereby  acquires  that  priority  of  lien 
upon  his  debtor's  property  to  which  his  vigilance  entitles 
him.1  And  under  proceedings  supplementary  to  execution 
in  Minnesota,  a  receiver  may  be  appointed  over  the  estate 
of  a  judgment  debtor,  with  power  to  collect  a  debt  due  to 
him  from  a  municipal  corporation.2 

§  402.  The  first  general  principle  to  be  observed  as  gov- 
erning this  branch  of  the  extraordinary  jurisdiction  of 
equity  is,  that  a  judgment  creditor,  seeking  the  aid  of  the 
court  by  the  appointment  of  a  receiver,  must  have  used  clue 
diligence  in  the  assertion  of  his  rights.3  The  bill  must, 
therefore,  be  filed  within  a  reasonable  time  after  the  return 
of  execution  unsatisfied.  And  while  it  is  impossible  to  fix 
any  precise  period  of  limitation,  within  which  the  judgment 
creditor  must  assert  his  right  to  the  aid  of  equity,  it  has 
been  held  that  when  he  has  suffered  a  period  of  nine  years 
to  elapse,  after  return  of  his  execution  nulla  bona,  without 
taking  any  steps  for  the  enforcement  of  his  demand,  and 
then  files  a  creditors'  bill  on  which  he  moves  for  a  receiver, 
his  long  delay  is  of  itself  sufficient  ground  for  refusing  the 
relief.4  And  when,  after  moving  for  a  receiver  of  the  debt- 
or's property,  the  judgment  creditor  permitted  the  proceed- 
ings to  lie  dormant,  and  took  no  further  steps  to  procure 
the  appointment  for  a  period  of  more  than  a  year,  and  until 
another  creditor  had  procured  an  order  for  a  receiver,  the 
court  refused  to  allow  the  receiver  appointed  on  the  second 

shares  of  stock  alleged  to  be  the  3 Gould  v.  Tryon,  Walk.  (Mich.), 

property  of  the  judgment  debtor,  353.     See,  also,  Fogarty  v.  Bourke, 

but  which  stand  upon  the  books  of  2  Dr.  &  War.,   580;   National  Me- 

the  corporation  in  the  name  of  the  chanics    Banking    Association    v. 

wife    see  State  Bank    v.    Gill,   23  Mariposa  Co.,  60  Barb.,  423. 

Hun,  410.  4  Gould  v.  Tryon,  Walk.  (Mich.), 

i  Flint  v.  Webb,  25  Minn.,  2G3.  353. 

2  Knight  v.  Nash,  22  Minn.,  452. 


CIIAP.  XII.]  CREDITORS.  3G9 

application  to  be  displaced,  but  removed  the  other  one. 
Such  a  case,  it  was  held,  should  be  governed  by  the  princi- 
ples applicable  to  dormant  executions,  and  the  vigilant  cred- 
itor should  be  allowed  priority.1  And  when  the  creditor 
had  acquiesced  in  the  debtor's  possession  of  his  property 
and  estate  for  a  long  period  of  years,  and  had  recognized 
the  debtor's  title  by  accepting  from  him  a  lease  of  a  portion 
of  the  property,  it  was  held  sufficient  ground  for  refusing  a 
receiver,  when  the  answer  positively  alleged  that  the  indebt- 
edness had  been  paid  in  full.2 

§  403.  Another  leading  principle,  and  one  of  equal  im- 
portance with  that  just  stated,  by  which  courts  of  equity 
are  governed  in  the  appointment  of  receivers  in  behalf  of 
judgment  creditors,  is,  that  the  plaintiff  must  have  fully 
and  completely  exhausted  his  remedy  at  law  for  the  collec- 
tion of  his  judgment,  before  he  is  entitled  to  the  aid  of  a 
receiver  in  equity.3  And  when  the  bill  itself  shows  that 
defendant  is  in  possession  of  property  which  is  subject  to 
levy  and  sale  under  execution,  and  that  there  is  no  obstacle 
or  impediment  in  the  way  of  enforcing  the  judgment  by 
the  usual  process  at  law,  no  ground  is  presented  for  the  ap- 
pointment of  a  receiver.4  And  when  it  is  apparent  that  the 
defendant  debtor  has  such  an  interest  in  real  estate  as  may 
be  reached  by  execution,  his  title  being  clear  and  there  being 
no  obstacles  in  the  way  of  enforcing  the  judgment  by  exe- 
cution, an  additional  reason  for  refusing  a  receiver,  and  for 
leaving  plaintiff  to  sell  the  property  under  execution,  is 
found  in  the  fact  that  by  this  course  the  defendant  will  not 
be  deprived  of  the  redemption  allowed  by  law.  For,  while 
it.  would  be  possible  to  reserve  the  right  of  redemption  on 

•National    Mechanics     Banking  169;  Parker  v.  Moore,  3  Edw.  Cli., 

Association    v.    Mariposa    Co.,    GO  234;  Congden  v.  Lee,  3  Edw.  Ck., 

Barl  >• .  423-  304 ;  Starr  v.  Rathbone,  1  Barb. ,  70 ; 

*Fogarty  v.  Bourke,  2Dr.  &War.,  Cassidy  v.  Meacham,  3  Paige,  311. 

58°-  *  Parker  v.   Moore,  3  Edw.  Ck., 

3  Smith    v.     Thompson,     Walk.  234;  Starr  v.  Rathbone,  1  Barb.,  70; 

(Mich.),  1 ;  Thayer  v.  Swift,  Harring.  Second  Ward  Bank  v.  Upmann,  12 

(Mich.),  430 ;  Steward  v.  Stevens,  id.,  Wis.,  499. 
24 


370 


RECEIVERS. 


[chap.  XII. 


a  sale  by  the  receiver,  it  is  regarded  as  the  safer  course  to 
follow  the  method  prescribed  by  law  for  sales  under  execu- 
tion.1 So  when  both  the  judgment  creditor  and  the  sheriff 
to  whom  his  execution  was  delivered  were  apprised  of  de- 
fendant's ownership  of  particular  real  estate,  which  had 
been  offered  in  satisfaction  of  the  debt  before  judgment 
obtained,  and  there  was  no  impediment  to  its  sale  under  ex- 
ecution, the  court  was  of  opinion  that  the  legal  remedy  had 
not  been  sufficiently  exhausted  to  give  the  judgment  cred- 
itor a  standing  in  a  court  of  equity,  or  the  right  to  a  receiver 
of  the  rents  and  profits  of  such  real  estate.2    And  when  the 


1  Second  Ward  Bank  v.  Upmann, 
12  Wis.,  499. 

2Congdon  v.  Lee,  3  Edw.  Ch., 
304.  This  was  a  motion  on  the  part 
of  plaintiffs  in  a  creditors'  bill,  that 
the  tenants  of  certain  real  estate  on 
which  their  judgment  was  alien  be 
required  to  attorn  and  pay  their 
rents  to  the  receiver,  before  ap- 
pointed in  the  cause.  McCoun, 
Vice-Chancellor,  says,  p.  308: 
' '  The  facts,  as  they  now  appear  by 
the  answer  and  by  the  affidavits 
read  in  opposition  to  the  motion  of 
the  complainants,  show  that  there 
was  no  necessity  for  the  complain- 
ants coming  into  this  court  for  a 
discovery  of  the  defendant's  real 
estate  now  sought  to  be  reached. 
The  complainants  were  informed 
beforehand  of  tins  particular  prop- 
erty, and  knew  all  about  it.  It 
was  offered  to  them  in  satisfaction 
of  their  debt,  before  the  judgment 
was  obtained.  When  the  sheriff 
called  with  the  execution  and 
inquired  for  property,  he  was  re- 
ferred, by  the  defendant,  to  the 
records  of  deeds  for  a  description 
of  the  property  which  he  could  levy 
on  and  sell ;  and  there  was  no  im- 
pediment   to    such   a  sale.      This 


must  be  supposed  to  have  been  well 
known,  both  to  the  complainants 
and  the  sheriff,  who  nevertheless 
returned  the  execution  unsatisfied, 
without  taking  any  step  toward  a 
levy  or  sale.  There  is  no  direct 
proof  of  collusion  in  this  case  be- 
tween the  complainants  and  the 
sheriff,  but  there  is  enough  to  show 
that  the  legal  remedy  had  not  been 
fairly  exhausted  when  the  bill  was 
filed.  The  sheriff  made  a  false  re- 
turn, or,  at  least,  a  return  which  he 
could  not  vouch  for  the  truth  of, 
until  he  had  exposed  the  property 
for  sale;  and  the  complainants 
knew  it  to  be  so,  yet  immediately 
filed  their  bill  founded  upon  it. 
With  respect  to  the  property  in 
question,  they  stood  in  no  need  of 
a  discovery  or  of  any  aid  of  this 
court  to  effect  a  sale.  What  right, 
then,  have  the  complainants  to.  a 
standing  in  this  court,  with  respect 
to  this  property?  To  give  them  a 
right  to  the  rents  through  the  me- 
dium of  the  receiver,  they  should 
be  honestly  and  fairly  in  court, 
either  for  the  purpose  of  discovery 
or  relief,  or  both.  True,  the  sher- 
iff's return  of  an  execution  unsatis- 
fied, prima  facie  gives  the  right 


\ 


CHAP.  XII.] 


CREDITORS. 


371 


bill  itself  showed  the  possession  of  a  large  amount  of  prop- 
erty in  the  defendant,  which  could  be  taken  on  execution, 
and  that  no  execution  had  been  issued  on  the  judgment  for 
a  period  of  three  years,  and  that  defendant  was  doing  busi- 
ness as  a  merchant  in  his  own  name,  it  was  held  that  there 
was  no  obstacle  in  the  way  of  enforcing  plaintiff's  remedy 
at  law,  and  he  was  refused  the  aid  of  a  receiver.1  So  when 
it  appeared  by  the  bill  that  the  defendant  debtor  was  the 
proprietor  of  a  hotel,  having  a  large  amount  of  furniture 
and  other  property  in  his  hotel,  a  receiver  was  denied,  the 
remedy  at  law  by  execution  not  having  been  exhausted.2 
And  when  defendant  showed  by  his  affidavit  that  the  pro- 
ceedings under  the  creditors'  bill  had  been  precipitated 
against  him,  without  necessity  and  with  no  previous  notice 
of  the  amount  of  the  judgment,  or  how  much  he  was  required 
to  pay,  and  that  he  would  have  paid  the  judgment  forth- 
with, if  notified  thereof,  the  court  refused  to  appoint  a 
receiver.3 


to  file  a  bill  of  this  sort;  and  in 
Stoors  v.  Kelsey,  2  Paige,  418,  a 
receiver  was  appointed,  though  it 
appeared  that  the  defendant  owned 
a  lot  of  ground  and  gave  the  sheriff 
notice  of  the  fact,  and  requested 
him  to  advertise  it,  which  he  re- 
fused to  do;  but  there  it  did  not 
appear  that  the  plaintiff  had  any 
knowledge  or  information  of  the 
fact  of  the  defendant's  ownership 
or  interest  in  the  land ;  and  there 
was  nothing  from  which  to  infer 
collusion  between  the  plaintiff  and 
sheriff  in  making  the  return.  Here 
the  case,  in  that  respect,  is  differ- 
ent ;  and  I  think,  under  the  circum- 
stances and  the  law  and  practice  of 
this  court  in  respect  to  these  cred- 
itors' bills,  that  the  complainants 
are  bound  to  pursue  their  legal 
remedy  for  a  sale  of  the  property; 
and,  not  being  legitimately  in  court 
for  the  purpose  of  discovery,  and  it 


not  appearing  how  far,  if  any,  the 
property  will  be  deficient  toward 
satisfying  the  judgment  upon  a 
sheriffs  sale,  the  court  has  not 
jurisdiction  to  lay  hold  of  the  rents 
in  the  meantime,  and  prevent  the 
defendant  from  receiving  them. 
The  result  is,  that  the  complain- 
ants' motion  must  be  denied,  and 
the  defendant's  motion  to  dissolve 
the  injunction  be  granted,  so  far  as 
it  restrains  the  defendant  from  in- 
terfering with  the  real  estate  or  the 
rents  and  profits  of  it.  With  the 
injunction  thus  removed,  the  de- 
fendant can  do  no  act  to  prejudice 
the  lien  of  the  judgment,  or  em- 
barrass a  sale  under  a  new  execu- 
tion to  be  issued." 

1  Parker  v.  Moore,  3  Edw.  Ch., 
234. 

-'Starr  v.  Eathbone,  1  Barb.,  70. 

3  Hart  v,  Tims,  3  Edw.  Ch.,  226. 


372  RECEIVERS.  [CHAP.  XII. 

§  103  a.  It  is,  however,  to  be  borne  in  mind  that  the  fact 
that  the  remedy  at  law  has  proved  ineffectual  in  the  partic- 
ular case,  does  not  confer  jurisdiction  upon  a  court  of  equity 
to  appoint  a  receiver  if  the  legal  remedy  is  adequate  and 
complete  in  itself,  its  inefficiency  being  wholly  due  to  the 
action  of  the  persons  or  officers  whose  duty  it  is  to  afford 
the  desired  relief.  Thus,  when  plaintiff  obtains  judgment 
against  a  county  upon  its  obligations  issued  in  aid  of  a  sub- 
scription to  a  railway  company,  and  in  obedience  to  a  writ 
of  mandamus  a  tax  is  levied  by  the  county  authorities  to 
pay  the  judgment,  but  the  person  selected  as  collector  of 
the  tax  refuses  to  qualify  or  to  act  as  such  collector,  equity 
has  no  jurisdiction  to  appoint  a  receiver  for  the  purpose  of 
collecting  the  tax,  even  though  it  is  shown  that  no  person 
can  be  found  who  will  undertake  such  collection.  The 
power  of  collecting  taxes  being  wholly  foreign  to  courts  of 
equity,  its  exercise  will  not  be  assumed  by  such  courts  merely 
because  the  appropriate  legal  remedy  has  failed  to  afford 
relief.1 

§  404.  Intimately  connected  with  the  doctrine  requiring 
the  creditor  to  first  exhaust  his  remedy  at  law,  is  the  ques- 
tion whether  the  aid  of  a  receiver  can  properly  be  extended 
to  a  judgment  creditor,  upon  the  sheriff's  return  of  an  exe- 
cution nulla  bona  before  the  return  day  thereof.  While  this 
question  has  given  rise  to  some  conflict  of  authority,  and 
has  not  been  wholly  free  from  doubt,  the  doctrine  may  now 
be  regarded  as  established,  both  upon  principle  and  author- 
ity, that  the  return  of  an  execution  unsatisfied,  before  its 
return  day  and  in  the  life-time  of  the  writ,  does  not  lay  the 
foundation  for  a  receiver  upon  a  bill  in  behalf  of  the  judg- 
ment creditor.     The  rule  is  founded  upon  the  fundamental 

i  Thompson  v.  Allen  County,  U.  poration  and  to  apply  them  in 
S.  Supreme  Court,  October  Term,  payment  of  its  indebtedness,  ita 
1885,  18  Chicago  Legal  News,  127.  charter  having  been  revoked  by  the 
See  Supervisors  v.  Rogers,  7  Wal.,  legislature,  see  Meriwether  v.  Gar- 
175.  As  to  the  power  of  a  court  of  rett,  102  U.  S.,  472 ;  Garrett  v.  City- 
equity  to  appoint  a  receiver  to  col-  of  Memphis,  5  Fed.  Rep.,  860. 
lect  taxes  due  to  a  municipal  cor- 


CHAP.  XII.] 


CREDITORS. 


373 


principle,  that  equity  never  lends  its  aid  for  the  enforcement  of 
rights  which  may  be  remedied  in  the  usual  course  of  proceed- 
ings at  law,  and  the  courts  will  not  permit  a  judgment 
debtor  to  be  harassed  with  a  suit  in  chancery,  until  the  cred- 
itor has  availed  himself  of  all  his  rights  at  law  for  the  col- 
lection of  his  judgment.  The  court  can  not  know,  until 
the  return  day  of  the  execution  has  elapsed,  that  the  debtor 
may  not  have  had  property  with  which  to  satisfy  the  judg- 
ment; and  if  it  can  dispense  with  a  legal  and  sufficient 
return  to  the  execution,  it  may  dispense  with  the  execu- 
tion entirely,  and  thus  assume  a  jurisdiction  not  given  by 
law.  It  is,  therefore,  requisite  that  the  execution  should 
remain  in  the  hands  of  the  sheriff  the  full  period  of  its  life- 
time.1 


1  Thayer  v.  Swift,  Harring. 
(Mich.),  430 ;  Spencer  v.  Cuyler,  9 
Ab.  Pr.,  382.  See,  also,  Cassidy  v. 
Meacham,  3  Paige,  311 ;  Smith  v. 
Thompson,  Walk.  (Mich.),  1 ;  Will- 
iams v.  Hubbard,  id.,  28;  Beach  v. 
White,  id.,  495;  Steward  v.  Stev- 
ens, Harring.  (Mich.),  169 ;  Beck  v. 
Burdett,  1  Paige,  305 ;  McElwain  v. 
Willis,  9  Wend.,  548.  But  see,  con- 
tra, Williams  v.  Hogeboom,  8  Paige, 
469;  Tyler  v.  Willis,  33  Barb.,  327; 
S.  C,  sub  nom.  Tyler  v.  Whitney, 
12  Ab.  Pr.,  465;  Bowen  v.  Park- 
hurst,  24  111.,  257.  The  doctrine  of 
the  text  is  forcibly  stated  in  Thayer 
v.  Swift,  Harring.  (Mich.),  430, 
where  the  execution  had  been  re- 
turned by  the  sheriff  some  days 
before  its  return  day,  as  follows : 
"  That  there  was  no  goods  and  chat- 
tels, lands  and  tenements  to  be 
found  in  his  bailiwick  to  secure  or 
pay  the  sum  due  the  complainant, 
or  any  part  thereof,  to  his  knowl- 
edge, after  diligent  search."  The 
motion  for  a  receiver  was  denied. 
Farnsworth,  Chancellor,  observes 
as  follows,  p.  431:    "The  founda- 


tion of  the  jurisdiction  of  this  court 
in  this  class  of  cases  is,  that  the 
judgment  creditor  shall  have  fully 
exhausted  his  remedy  at  law.  It 
has  been  repeatedly  held  that  the 
court  will  not  retain  a  bill  as  a  judg- 
ment creditor's  bill  merely,  filed 
before  the  return  day  of  the  execu- 
tion. In  the  absence  of  any  author- 
ity or  dicta  upon  the  subject,  I 
should  have  as  little  doubt  upon  a 
case  where  the  execution  was  actu- 
ally returned  before  the  return  day, 
although  the  bill  was  not  filed  un- 
til after  the  return  day  had  elapsed. 
Courts  of  chancery  have  held  the 
judgment  creditor  in  every  ad- 
judged case,  before  administering 
this  harsh  remedy  of  depriving  the 
debtor  absolutely  of  all  control  over 
every  part  and  portion  of  Ins  prop- 
erty, to  bring  himself  strictly  and 
rigidly  within  this  rule.  No  case 
can  be  found  where  this  remedy 
has  been  afforded  without  a  strict 
compliance  with  all  the  forms. 
What  is  the  reason  of  the  rule?  It 
is  that  a  judgment  debtor  shall  not 
be  harassed  with  a  suit  in  chancery 


374 


RECEIVERS. 


[chap.  xn. 


§  405.     Where  an  execution  was  issued  against  the  joint 
property  of   two  defendants,  upon   a  judgment  rendered 


until  the  creditor  has  availed  him- 
self of  all  his  common-law  rights 
to  collect  his  judgment.  The  only 
dictum  to  be  found  which  has  ever 
led  to  any  doubt  upon  tliis  subject, 
is  to  be  found  in  the  opinion  of 
Chancellor  Walworth,  in  the  case 
of  Cassidy  v.  Meacham,  3  Paige, 
312.  This  idea  is  thrown  out  as  a 
perhaps,  and  rather  as  a  specula- 
tion than  as  a  decision.  He  says, 
perhaps  a  return  made  before  the 
return  day  may  be  good  by  rela- 
tion. But  if  we  once  depart  from 
the  well-settled  rule,  that  the  cred- 
itor shall  fairly  and  fully  first  ex- 
haust his  remedy  at  law,  where 
shall  we  stop?  "  See,  also,  opinion 
of  the  same  court  in  Steward  v. 
Stevens,  Harring.  (Mich.),  169, 
where  the  same  doctrine  is  an- 
nounced with  regard  to  creditors' 
bills,  though  it  does  not  appear 
from  the  reported  case  whether 
any  motion  was  made  for  a  re- 
ceiver. In  Spencer  v.  Cuyler,  9  Ab. 
Pr.,  383,  which  was  under  the  New 
York  code  of  procedure,  the  sheriff 
had  returned  the  executions,  at 
plaintiff's  request,  before  maturity. 
The  supreme  court,  at  general  term, 
say,  Johnson,  J.,  delivering  the 
opinion :  "A  return  thus  procured 
is,  for  this  purpose,  to  be  regarded 
as  the  act  of  the  party,  and  not  the 
official  act  of  the  sheriff.  The 
remedy  by  execution,  in  such  case, 
has  not  been  exhausted,  as  the  stat- 
ute obviously  intended  it  should  be 
before  these  supplementary  pro- 
ceedings could  be  instituted.  If 
the  practice  adopted  in  the  cases 
before  us  is  to  prevail,  the  issuing 
and  return  of  an  execution  would 


become  a  mere  empty  form,  and 
might  as  well  be  dispensed  with 
altogether;  and  besides,  it  would 
naturally,  if  not  inevitably,  lead  to 
the  most  intolerable  favoritism  and 
abuse.  If  we  allow  a  sheriff  to 
yield  to  the  persuasion  or  dictation 
of  a  friendly  or  influential  creditor, 
and  fix  at  Ins  own  discretion  or  ca- 
price different  return  days  for  dif- 
ferent executions  in  his  hands  at 
the  same  time,  we  at  once  invest 
liim  with  the  dangerous  powers  of 
discriminating  between  creditors, 
and  giving  one  a  preference  over 
another  in  respect  to  all  the  equi- 
table assets  of  the  debtors,  capable 
of  being  reached  by  these  proceed- 
ings. This  consideration  alone 
seems  to  us  a  sufficient  objection  to 
the  practice,  without  adverting  to 
the  hardship  and  oppression  to 
which  a  defendant  may  be  so  read- 
ily and  so  summarily  subjected  un- 
der it."  But  in  Williams  v.  Hoge- 
boom,  8  Paige,  469,  it  was  held  that 
the  objection  that  the  complainant 
had  not  exhausted  his  remedy  at 
law,  because  the  sheriff  did  not 
wait  until  after  return  day  of  the 
execution  before  making  his  re- 
turn, was  not  well  taken,  although 
it  was  said,  following  the  dictum 
of  Chancellor  Walworth  in  Cassidy 
v.  Meacham,  3  Paige,  311,  that  the 
court  would  not  permit  a  creditor's 
bill,  founded  upon  such  a  return, 
to  be  filed  until  after  the  return  day 
of  the  execution  had  passed.  And 
in  Tyler  v.  Willis,  33  Barb.,  327;  S. 
C,  sub  nom.  Tyler  v.  Whitney,  12 
Ab.  Pr.,  465,  it  was  held  that  the 
return  of  the  execution  unsatisfied, 
before  its  return  day,  constituted 


CHAP.  XII.]  CREDITORS.  375 

against  one  of  the  two,  personal  service  having  been  had 
only  upon  the  one,  and  the  sheriff  returned  to  the  execution 
that  the  defendants  had  no  goods  or  chattels,  lands  or  tene- 
ments, out  of  which  to  satisfy  the  execution,  without  in  ex- 
press terras  negativing  the  fact  that  either  of  the  two  had 
any  separate  property,  such  return  was  held  sufficient 
foundation  for  a  creditor's  bill  and  a  receiver  of  the  joint 
property  of  the  two  defendants  and  of  the  separafe  property 
of  the  defendant  who  was  served  with  process.1  But  the 
objection  that  the  bill  did  not  allege  that  the  execution  was 
directed  to  the  sheriff  of  the  county  where  the  defendant 
resided  Avhen  it  was  issued,  although  an  objection  of  form, 
was  held  to  be  sufficient  ground  for  refusing  a  receiver,  but 
the  application  was  denied  without  costs,  and  the  plaintiff 
was  given  leave  to  amend  and  to  renew  the  application  after 
amendment.2 

§  406.  Having  already  shown  that  the  aid  of  a  receiver 
is  only  extended  in  behalf  of  creditors  who  have  fully  ex- 
hausted their  remedy  at  law,  it  follows  necessarily  that  the 
jurisdiction  will  not  be  exercised  in  favor  of  mere  general 
creditors,  whose  rights  rest  only  in  contract  and  are  not  yet 
reduced  to  judgment,  and  who  have  acquired  no  lien  upon 
the  property  of  the  debtor.  Courts  of  equity  will  not  per- 
mit any  interference  with  the  right  of  the  citizen  to  control 
his  own  property,  at  the  suit  of  creditors  who  have  acquired 
no  lien  thereon,  and  whatever  embarrassment  the  creditor 
may  experience,  by  reason  of  the  slow  procedure  of  the 
courts  of  law,  must  be  remedied  by  legislative  and  not  by 
judicial  authority.  And  while  there  are  a  few  instances  where 
the  courts  have  maintained  a  contrary  doctrine,  the  great 
weight  of  authority  supports  the  rule,  that,  in  the  absence 

no  objection  to  the  appointment  of  lie  upon  the  return  of  an  execution 

a  receiver,  in  the  absence  of  any  nulla  bona  before  the  return  day. 

collusion  or  fraud  on  the  part  of  Bowen  v.  Parkhurst,  21  111.,  257. 
plaintiff  to  prevent  a  levy  on  the        l  Austin  v.  Figueira,  7  Paige,  56. 
debtor's  property.    And  it  is  held        2  Williams  v.  Hogeboom,  8  Paige, 

in  Illinois,  that  a  creditor's  bill  will  469. 


376 


RECEIVERS. 


[CHAP.  XII. 


of  statutory  provisions  to  the  contrary,  a  general  contract 
creditor,  before  judgment,  is  not  entitled  either  to  an  injunc- 
tion or  a  receiver  against  his  debtor,  on  whose  property  he 
has  acquired  no  lien.1  Any  interference  with  the  debtor's 
property,  or  with  his  right  of  disposing  of  it,  before  judg- 
ment, is  beyond  the  judicial  power,  and  courts  of  equity 
will  not  extend  their  extraordinary  jurisdiction  beyond  the 
limits  fixed  by  the  authorities.2    Nor  is  the  rule  affected  or 


J  Uhl  v.  Dillon,  10  Md.,  500 ;  Nus- 
baum  v.  Stein,  12  Md.,  315;  Hub- 
bard v.  Hubbard,  14  Md.,  356;  Rich 
v.  Levy,  16  Md.,  74;  Hulse  v. 
Wright,  Wright,  61;  McGoldrick 
v.  Slevin,  43  Ind.,  522;  Bayaud 
v.  Fellows,  28  Barb.,  451 ;  May  v. 
Greenhill,  80  Ind.,  124;  Adee  v. 
Bigler,  81  N.  Y.,  349;  Johnson 
v.  Farnum,  56  Ga.,  144;  Dodge  v. 
Pyrolusite  Manganese  Co.,  69  Ga., 
665.  And  see  Blondheim  v.  Moore, 
11  Md.,  365;  Wiggins  v.  Arm- 
strong, 2  Johns.  Ch.,  144;  Hol- 
drege  v.  Gwynne,  3  C.  E.  Green, 
26;  Young  v.  Frier,  1  Stockt.,  465; 
Phelps  v.  Foster,  18  111.,  309;  Bige- 
low  v.  Andress,  31  HI.,  322;  Rhodes 
v.  Cousins,  6  Rand.,  188.  But  see, 
contra,  Haggarty  v.  Pittman,  1 
Paige,  298;  Cohen  v.  Meyers,  42 
Ga.,  46 ;  Thompsen  v.  Diffenderfer, 

I  Md.  Ch.,  489;  Rosenbergs.  Moore, 

II  Md.,  376;  Wachtel  v.  Wilde,  58 
Ga.,  50;  Morrison  v.  Shuster,  1 
Mackey,  190.  See,  also,  Kehler  v. 
Jack  Manufacturing  Co.,  55  Ga., 
639. 

2 Uhl  v.  Dillon,  10  Md.,  500.  This 
was  a  bill  for  an  injunction  and  re- 
ceiver filed  by  a  creditor  on  an  open 
account,  alleging  that  the  defend- 
ant was  largely  indebted  for  his 
stock  in  trade;  that  he  was  dis- 
posing of  his  stock,  had  sold  his 
real  estate,  and  was  collecting  debts 


due  him,  with  intent  to  defraud  his 
creditors,  and  that  he  intended  to 
abscond  to  parts  unknown  for  the 
purpose  of  hindering,  delaying  and 
defrauding  his  creditors.  An  in- 
junction was  granted  and  a  receiver 
was  appointed  by  the  court  below, 
but  on  appeal  the  decree  was  re- 
versed and  bill  dismissed.  The 
court,  Bartol,  J.,  say,  p.  503:  "The 
bill  filed  by  the  appellees  in  this 
cause  states  no  sufficient  case 
entitling  them  to  the  relief  prayed. 
No  authority  has  been  shown  to 
this  court,  nor  can  any  be  pro- 
duced, entitled  to  consideration, 
which  sanctions  the  exercise  of  the 
high  and  extraordinary  power  of  a 
court  of  chancery  to  interpose,  by 
writ  of  injunction,  in  a  case  like 
the  one  before  us,  restraining  a 
debtor  in  the  enjoyment  and  power 
of  disposition  of  his  property.  The 
appellees  (the  complainants  below) 
are  merely  general  creditors  of  the 
appellant,  who  have  not  prosecuted 
then  claim  to  judgment  and  ex- 
ecution, nor  in  any  other  manner 
acquired  a  lien  upon  the  debtor's 
property,  and  were  not  entitled  to 
the  writ  of  injunction  nor  to  the 
appointment  of  a  receiver.  What- 
ever may  be  the  supposed  defects 
of  the  existing  laws  of  the  state, 
in  leaving  to  the  debtor  the  abso- 
lute  power   of   disposing   of    his 


CHAP.  XII.]  CREDITORS.  377 

varied  by  reason  of  fraud  on  the  part  of  the  debtor,  and  a 
receiver  will  not  be  granted  in  favor  of  a  creditor  before 
judgment,  even  though  the  bill  alleges  that  the  debtor  has 
made  fraudulent  transfers  and  mortgages  of  his  property.1 
Thus,  where  the  bill  alleged  that  the  debtor  was  wasting 
his  resources  and  sending  his  goods  beyond  the  reach  of  his 
creditors ;  that  he  was  utterly  insolvent  and  had  executed  a 
mortgage  of  his  effects,  without  consideration,  and  for  the 
purpose  of  hindering  and  defrauding  his  creditors ;  and  that 
plaintiff  had  brought  suit  upon  his  demand,  but  would  not 
be  able  to  obtain  judgment  and  execution  before  defendant's 
assets  would  be  wasted,  the  court  refused  an  injunction  and 
a  receiver.2  So  it  is  held  that  the  fact  of  the  debtor  having 
entered  his  appearance  and  consented  to  judgment  in  cer- 
tain actions,  brought  by  other  creditors  upon  demands  which 
were  justly  due,  will  not  warrant  the  court  in  granting  a 
receiver  upon  the  application  of  a  creditor  without  judg- 
ment, since  it  is  a  debtor's  right  to  prefer  any  creditor  whom 
he  may  choose.3 


property,  and  leaving  the  creditor  the  case  before  us,  and  we  adopt  its 

to  the  slow  and  very  inadequate  reasoning  as  applicable  here." 

legal  remedies    now    provided,    if  l  Hulse  v.  Wright,  Wright,  61 ; 

such  defects  exist,  it  is  solely  in  the  Rich  v.  Levy,  16  Md.,  74;  Nusbaum 

power  of  the  legislature  to  correct  v.  Stein,  12  Md.,  315.     But  in  the 

them.  It  is  not  within  the  province  latter  case,  the  court  seem  to  base 

of  the  chancery  courts  to  stretch  their  decision  somewhat  upon  the 

their  power  beyond  the  limits  of  fact  that  it  appeared  from  the  bill 

the  authorities  of  the  law,  for  the  that  the  debtor's  assets  were  suffi- 

purpose  of  remedying  such  defects,  cient  to   discharge    his  liabilities. 

Such  a  course  would  be  productive  See,  contra,  Haggarty  v.  Pittman, 

of  great  mischief,   and  make  the  1  Paige,  298;  Cohen  v.  Meyers,  42 

rights  of  the  citizen  depend  upon  Ga.,  46;    Rosenberg  v.  Moore,    11 

the  vague  and  uncertain  discretion  Md.,  376. 

of  the  judges,  instead  of  the  safe  2Richi\  Levy,  16  Md.,  74. 

and  well  defined  rules  of  law.  The  3McGoldrick  v.  Slcvin,  -13  Ind., 

learned  Chancellor  Kent,  in  the  de-  522.     While  the  general   doctrine 

cision  of   the  case  of  Wiggins  v.  of  the  text  is  believed  to  be  sus- 

Armstrong,  2  Johns.  Ch.  Rep.,  144,  tained  by  the  undoubted  weight  of 

has  stated,  most  clearly  and  forci-  authority,   there  are  several  cases 

bly,  the  principles  which  govern  in  which  a  contrary  doctrine  has 


378 


RECEIVERS. 


[CHAP.  XII. 


§  407.  While,  as  is  thus  shown,  the  rule  denying  the  aid 
of  a  receiver  for  the  protection  of  contract  or  general  cred- 
itors, before  judgment,  is  well  established,  an  apparent  ex- 
ception to  the  rule  has  been  recognized  under  the  code  of 
procedure  in  New  York,  in  cases  of  partnership  creditors, 
the  exception,  however,  being  based  upon  equitable  princi- 
ples not  inconsistent  with  the  spirit  of  the  general  rule. 
Thus,  in  the  case  of  an  indebtedness  due  from  a  copartner- 
ship, where  the  insolvency  of  the  firm  and  of  its  individual 
members  is  conceded,  and  the  indebtedness  is  admitted  to 
be  justly  due,  the  creditor  may  have  an  injunction  and  a 
receiver,  as  against  the  partners  and  third  persons  to  whom 


been  announced.  In  Haggarty  v. 
Pittman,  1  Paige,  298,  an  injunc- 
tion and  receiver  were  allowed  in 
behalf  of  creditors  without  judg- 
ment, upon  a  bill  alleging  insolv- 
ency of  the  debtor,  and  that  he 
had  made  an  assignment  of  his 
property  to  one  of  his  creditors, 
who  was  himself  insolvent.  So  in 
Rosenberg  v.  Moore,  11  Md.,  376, 
an  injunction  and  receiver  were 
allowed  on  the  application  of  gen- 
eral creditors,  before  judgment, 
upon  the  ground  of  a  fraudulent 
conveyance  of  a  portion  of  his 
property  by  the  debtor,  in  trust  for 
his  creditors,  and  upon  the  further 
ground  that  the  property  was  in 
imminent  danger,  being  in  the  cus- 
tody of  a  person  of  notoriously  bad 
character.  But  it  does  not  appear 
from  the  case  as  reported,  that  any 
objection  was  urged  on  the  ground 
that  plaintiffs  had  no  judgment  or 
lien  upon  the  debtor's  property. 
In  Thompson  v.  Diffenderfer,  1  Md. 
Ch.,  489,  the  court  inclined  to  hold 
that  creditors  without  judgment 
were  entitled  to  a  receiver,  upon  a 
bill  alleging   fraudulent  transfers 


of  his  property  by  the  debtor,  and 
that  he  was  in  insolvent  circum- 
stances, but  the  receiver  was  re- 
fused on  the  ground  that  the 
answers  fully  denied  the  equities 
of  the  bill.  In  Cohen  v.  Meyers, 
42  Ga.,  46,  where  the  bill  charged 
insolvency  of  the  debtor,  and  that 
he  had  fraudulently  transferred  his 
goods  to  a  third  person,  who  was 
charged  with  complicity  in  the 
fraud,  and  that  the  debtor  had 
bought  the  goods  with  intent  to 
defraud  the  plaintiffs,  a  receiver 
was  allowed  before  judgment.  In 
this  case,  the  court  based  the  right 
of  the  creditors  to  the  relief  upon 
the  ground  that  the  goods  for 
which  the  indebtedness  sued  on 
was  incurred,  never  in  equity  be- 
longed to  the  defendant,  he  having 
obtained  them  by  fraudulent  in- 
tent, and  that  a  proper  case  was, 
therefore,  presented  for  the  action 
of  a  court  of  equity.  Notwith- 
standing these  cases,  however,  it  is 
believed  that  the  weight  of  author- 
ity and  reasoning  supports  the  rule 
as  laid  down  in  the  text. 


CHAP.  XII.]  CEEDITORS.  379 

they  have  attempted  to  assign  their  property  for  the  pur- 
pose of  hindering  and  delaying  their  creditors,  even  though 
his  demand  is  not  yet  reduced  to  judgment.  In  such  case, 
the  debt  not  being  disputed,  and  there  being  no  advantage 
to  be  derived  from  a  preliminary  judgment  and  execution, 
it  is  deemed  proper  to  extend  all  the  relief  desired  in  one 
and  the  same  action,  without  compelling  the  creditor  to 
resort  to  the  delay  of  obtaining  judgment  in  a  separate 
suit.1  The  doctrine,  however,  of  the  New  York  courts  upon 
this  point,  would  seem  to  be  limited'  to  cases  where  the  in- 
debtedness is  not  disputed,  and  where  the  plaintiff  creditor 
is  proceeding  not  merely  in  behalf  of  himself  and  to  secure 
his  individual  demand,  but  for  the  benefit  of  all  creditors 
of  the  firm.2  And  in  the  case  of  a  limited  or  special  part- 
nership, where  upon  the  insolvency  of  the  firm  the  assets 
become  a  trust  fund,  which  it  is  the  duty  of  the  general 
partners  to  assign  to  a  trustee  for  the  benefit  of  all  the  firm 
creditors,  if  the  general  partners  fail  to  perform  this  duty, 
the  court  may  interfere  by  appointing  a  receiver  of  the  firm 
assets  for  the  benefit  of  all  the  creditors,  in  an  action  insti- 
tuted by  a  general  creditor  for  himself  and  such  others  as 
may  elect  to  take  the  benefit  of  the  action.  The  relief,  in 
such  case,  would  seem  to  be  founded  upon  the  nature  of  the 
firm  assets,  as  a  trust  fund  upon  the  insolvency  of  the  part- 
ners, the  creditor  instituting  the  proceedings  being  regarded 
as  a  cestui  que  trust  of  such  fund,  even  though  he  has  not 
yet  obtained  judgment.15 


!Mott  v.  Dunn,  10  How.  Pr.,  225.  remove  or  dispose  of  his  property 

See,  also,  Levy  v.  Ely,  15  How.  Pr.,  with  intent  to  defraud  his  creditors, 

395;  Jackson  v.  Sheldon,  9  Ab.  Pr.,  a    temporary  injunction  may    be 

127;   LaCliaise  v.  Lord,    10  How.  granted  to  restrain  such  removal 

Pr.,  461.     In  Mott  v.  Dunn,  consid-  or  disposition." 
erable    reliance    is  placed  by  the        2  LaCliaise  v.  Lord,  10  How.  Pr., 

court  upon  the  provision  of    the  461;  Levy  v.  Ely,  15  How.  Pr.,  395. 

code  of   procedure,  that  "where,  See,  also,  Jackson  v.  Sheldon,  9  A  b. 

during  the  pendency  of  an  action,  Pr. ,  127. 

it  shall  appear  by  affidavit  that  the        3  Jackson  v.  Sheldon,  9  Ab.  Pr., 

defendant  threatens  or  is  about  to  127. 


380  RECEIVERS.  [CHAP.  XII. 

§  408.  It  is  also  to  be  noted  that  creditors,  even  before 
judgment,  may  have  such  a  special  or  equitable  lien  upon 
the  debtor's  property  as  to  entitle  them  to  the  aid  of  equity 
and  to  the  protection  of  a  receiver.  For  example,  where 
persons  have  advanced  money  for  effecting  repairs  upon  a 
vessel,  and  for  furnishing  supplies,  and  have  received  from 
the  master  of  the  vessel  an  assignment  of  all  the  freight 
money  and  earnings  of  the  vessel  upon  her  voyage,  and  all 
lien  and  interest  which  he  as  master  had  thereon  on  account 
of  such  advances  or  his  liability  therefor,  such  creditors  are 
entitled  to  an  injunction  to  prevent  any  interference  with 
the  collection  of  the  freight  money,  and  a  receiver  to  collect 
it,  upon  showing  that  the  owners  of  the  vessel  are  insolvent, 
and  that  the  relief  is  necessary  to  protect  their  lien  acquired 
by  assignment  from  the  master.1 

§  409.  In  "Wisconsin,  it  is  held  to  be  competent  for  a 
court  of  general  equity  jurisdiction  to  appoint  a  receiver 
over  the  property  and  effects  of  a  married  woman,  doing 
business  as  a  trader,  in  an  equitable  action  by  her  creditors 
to  charge  her  individual  property  with  the  payment  of  her 
liabilities,  when  there  is  danger  of  the  assets  being  wasted 
or  put  beyond  the  reach  of  creditors.  Such  a  proceeding, 
it  is  held,  bears  a  close  resemblance  to  a  creditor's  bill  for 
the  enforcement  of  a  judgment,  and  there  would  seem  to  be 
no  impropriety  in  granting  an  injunction  and  a  receiver, 
upon  the  same  grounds  as  in  cases  of  creditors'  bills.2 

§  410.  It  is  also  held  that  a  creditor  holding  an  annuity, 
which  is  a  charge  upon  real  estate,  may  have  the  aid  of  a 
receiver  when  his  annuity  is  in  arrears  and  he  is  without 
le^al  remedy  for  its  enforcement,  although  he  can  not  have 
the  receiver  continued  when  his  arrears  are  paid  off.3  And 
where  a  debtor  has  conveyed  a  life  estate  in  certain  lease- 
hold premises,  in  trust  for  the  purpose  of  securing  his  cred- 
itors by  payment  annually  out  of  the  rents  and  profits  until 

!Sorley  v.  Brewer,  18  How.  Pr.,  3Sankey  v.  O'Maley,  2  Mol.,  491. 
276.  See,  also,  Beamish  v.  Austen,  Ir. 

2 Todd  v.  Lee,  15  Wis.,  365.  Rep.,  9  Eq.,  361. 


CHAP.  XII.]  CKEDITOKS.    .  3S1 

the  indebtedness  shall  be  extinguished,  when  the  property 
is  to  be  reconveyed,  the  creditors  have  such  an  interest  as 
to  entitle  them  to  a  receiver,  when  the  payments  are  long 
in  arrear,  even  though  they  do  not  occupy  the  position  of 
mortgagees  and  have  no  power  to  sell  the  property.1 

•  §  411.  Fraudulent  assignments  of  his  property  by  a  judg- 
ment debtor,  for  the  purpose  of  hindering  and  defeating 
his  creditors,  are  frequently  made  the  foundation  for  pro- 
ceedings in  equity  for  the  appointment  of  a  receiver  in 
behalf  of  judgment  creditors.2  And  when  it  is  shown  upon 
a  creditor's  bill  that  the  judgment  debtor  has  made  an  as- 
signment of  all  his  property  in  fraud  of  his  creditors,  to  an 
assignee  who  is  known  to  be  insolvent,  such  a  breach,  of 
trust  is  presented  as  to  warrant  the  court  in  appointing  a 
receiver  of  the  property  assigned.  Especially  will  the  re- 
lief be  granted,  in  such  case,  when  the  debtor  himself  con- 
tinues in  possession  of  the  property  and  exercises  acts  of 
ownership,  there  being  no  actual  change  of  possession.3  But 
while  it  is  regarded  as  a  sufficient  prima  facie  case  for  the 
appointment  of  a  receiver,  to  show  an  assignment  of  his 
property  by  the  debtor  to  hinder  and  delay  his  creditors,  to 
an  assignee  who  is  irresponsible  and  insolvent,  yet  when 
defendant  satisfactorily  shows  to  the  court  by  affidavit  that 
the  plaintiff  is  in  error  as  to  the  pecuniary  condition  of  the 
assignee,  the  court  will  not  by  a  receiver  take  the  property 
out  of  the  hands  of  the  assignee  before  the  rights  of  the 
parties  are  finally  determined.4  And  the  appointment  of  a 
receiver  in  behalf  of  judgment  creditors,  over  the  property 
of  their  debtor,  does  not  of  itself  preclude  or  determine  the 
rights  of  an  assignee  of  the  debtor  claiming  his  assets  under 
an  assignment  from  him,  and  the  property  can  only  be  re- 


1  Taylor  v.   Emerson,    4    Dr.    &  3Connah  v.  Sedgwick,  1   Barb., 
War.,"ll7.  210. 

2  See    Connah    v.    Sedgwick,    1  4  Goodyear  v.  Betts,  7  How.  Pr., 
Barb.,   210;  Goodyear  v.   Betts,  7  187. 

How.     Pr.,     187;     Shainwald     v. 
Lewis,  7  Sawyer,  148. 


382  RECEIVERS.  [CHAP.  XII. 

covered  by  an  action  brought  by  the  receiver;  since  the 
court  can  not  determine  a  disputed  question  of  title  in  pass- 
ing upon  the  application  for  a  receiver,  especially  when  the 
assignee  is  not  a  party  to  the  proceeding.1  But  in  an  action 
brought  by  a  judgment  creditor  to  set  aside  a  conveyance 
of  land  made  by  the  debtor  with  intent  to  defraud  his  cred- 
itors, the  grantees  being  made  parties,  and  the  conveyance 
being  found  to  be  fraudulent  as  against  the  judgment  cred- 
itor, it  is  proper  to  appoint  a  receiver  to  sell  and  convey  the 
property.2  So  when  a  decree  in  equity  is  obtained  against 
defendant  requiring  him  to  pay  to  complainant  certain  funds 
obtained  by  fraud  and  collusion,  upon  the  return  of  execu- 
tion unsatisfied  complainant  is  entitled  to  a  receiver,  upon  a 
bill  alleging  that  defendant  has  disposed  and  is  about  to 
dispose  of  his  property  with  intent  to  evade  the  decree  and 
to  hinder  and  delay  complainant  in  its  enforcement.  And 
in  such  case,  it  is  not  necessary  to  specifically  describe  the 
property  which  it  is  sought  to  reach  by  the  creditors  bill.3 
So  when  a  judgment  debtor  has  disposed  of  a  large  amount 
of  his  stock  in  trade,  without  accounting  for  the  proceeds, 
and  leaving  a  large  amount  of  indebtedness  unpaid,  a  re- 
ceiver has  been  appointed  in  a  creditor's,  suit,  although  the 
debtor  denied  any  fraudulent  disposition  of  his  property,  a 
receiver  being  necessary  to  institute  the  proper  suits  to 
determine  what  disposition  was  made  of  the  property.4 

§  412.  Courts  of  equity  will  also  extend  the  aid  of  a  re- 
ceiver for  the  protection  of  creditors  under  assignments 
made  by  the  debtor  in  good  faith  and  without  fraud  for  the 
benefit  of  his  creditors,  when  the  assignee  refuses  to  ac- 
cept of  the  trust  created  by  the  assignment,  or  when  he 

1  Journeay  v.  Brown,  2  Dutch.,  3Shainwald  v.  Lewis,  7  Sawyer, 
111.  And  see  this  case  for  the  148.  And  see  this  case  for  an  ex- 
practice  in  New  Jersey  in  appoint-  haustive  discussion  of  the  jurisdic- 
ing  receivers  in  behalf  of  judgment  tion  of  equity  by  creditors'  bills  to 
creditors.  reach    the    assets  of   a  judgment 

2Shand  v.  Hanley,  71  N.  Y.,  319.  debtor,  and  of  the  right  to  a  re- 

And  see  this  case  as  to  the  effect  of  ceiver  in  such  cases. 

a  receiver's  sale  upon  prior  hens.  4  Strong  v.  Goldman,  8  Biss.,  552. 


CHAP.  XII.]  CREDITORS. 


383 


does  not  act  in  good  faith  in  carrying  out  its  terms.1  Thus, 
in  the  case  of  a  general  assignment  by  a  debtor  for  the 
benefit  of  his  creditors,  upon  the  refusal  of  the  trustee 
named  in  the  deed  of  assignment  to  proceed  with  the  exe- 
cution of  the  trust,  a  receiver  may  be  allowed  upon  a  bill 
filed  by  creditors  for  whose  benefit  the  assignment  was 
made.2  And  where  an  assignment  is  made  to  trustees  for 
the  benefit  of  creditors,  a  judgment  creditor  of  the  as- 
signor, who  files  his  bill  in  behalf  of  himself  and  other 
creditors  in  interest,  is  entitled  to  a  receiver  to  take  charge 
of  the  effects  assigned,  upon  showing  gross  mismanage- 
ment on  the  part  of  the  trustees,  and  a  failure  on  their  part 
to  comply  with  the  requirements  of  the  trust,  and  that 
there  is  imminent  danger  of  the  assets  being  wasted  and 
diverted  from  the  purposes  for  which  they  were  assigned.' 
So  where  real  estate  is  conveyed  by  a  debtor,  in  trust  to  be 
sold  for  the  payment  of  his  debts,  and  the  rents  to  be  ap- 
plied for  the  same  purpose,  and  the  trustee  has  been  in  pos- 
session a  number  of  years  without  paying,  a  creditor  may 
have  a  receiver  appointed  until  answer,  when  the  trustee 
resides  beyond  the  jurisdiction  of  the  court  and  has  not 
appeared  to  the  action.4 

§  413.  In  proceedings  supplementary  to  execution,  under 
the  New  York  code  of  procedure,  it  is  no  sufficient  objec- 
tion to  placing  the  property  and  effects  of  a  judgment 
debtor  in  the  hands  of  a  receiver,  that  the  property  sought 
to  be  reached  is  claimed  by  adverse  claimants,  and  is  such 

1  Suydam  v.  Dequindre,  Hairing,  business,  and  the  prior  assignee 
(Mich.),  347.  And  see  Malcolm  v.  applied  for  a  receiver  of  the  debts 
Montgomery,  2  Mol.,  500.  due  the  business,  Lord  Eldon  held 

2  Suydam  v.  Dequindre,  Hairing,  that  the  case  was  such  that  if  the 
(Mich.),  347.  And  where  a  share  in  Vice-Chancellor,  before  whom  the 
the  profits  of  a  business  had  been  application  was  pending,  was  about 
assigned  to  a  person  in  considera-  to  appoint  a  receiver  to  collect  tlic 
tion  of  money  advanced  for  the  assets,  he  would  not  interfere, 
purpose  of  carrying  on  the  busi-  Candler  v.  Candler,  Jac. ,  225. 
ness,  and  a  subsequent  assignment  3  Jones  v.  Dougherty,  10  Ga.,  273. 
was  made  to  a  third  party,  of  a  4 Malcolm  v.  Montgomery,  2 -Mob, 
share  of  the  profits  in  the    same  500. 


3S4  RECEIVERS.  [CUAP.  XII. 

us  can  be  taken  in  execution,  and  is  accessible  for  purposes 
of  seizure  and  sale,  if  the  court  is  satisfied  that  the  title  to 
the  property  may  be  tried  with  as  little  expense  in  an  action 
by  the  receiver,  as  in  a  suit  brought  by  the  adverse  claimants.1 
§  414.     It  has  already  been  shown,  that  the  denial  by  de- 
fendant in  a  creditor's  bill  that  he  has  any  property  or 
effects  of  any  kind,  of  which  a  receiver  could  take  posses- 
sion if  appointed,  is  no  bar  to  the  exercise  of  the  jurisdic- 
tion in  behalf  of  the  creditor  in  a  proper  case.2    And  in 
conformity  with  the  same  principle,  it  is  held  that  the  fact 
of  the  debtor  having  filed  his  answer,  denying  that  he  has 
any  property  or  effects  of  any  kind,  presents  no  sufficient 
objection  to  a  motion  for  an  order  of  reference  to  a  master 
to  appoint  a  receiver,  and  requiring  the  debtor  to  transfer 
his  effects  to  such  receiver  under  oath.3     So  it  would  seem 
to  be  no  objection  to  the  appointment  of  a  receiver  of  the 
effects  of  a  judgment  debtor,  that  he  has  no  other  property 
than  an  equity  of  redemption  in  real  estate,  which  he  has 
always  been  willing  to  have  sold  on  execution.4    But  it  has 
been  held  improper  to  appoint  a  receiver,  on  proceedings 
supplementary  to  execution,  merely  for  the  purpose  of  at- 
tacking an   alleged  fraudulent   assignment  made   by  the 
debtor,  when  the  judgment  creditor  himself  has  a  right  of 
action  to  set  aside  such  assignment.5 

§  415.  Under  the  practice  of  the  New  York  Court  of 
Chancery,  it  was  customary,  upon  applications  for  receivers 
in  aid  of  creditors'  bills,  to  refer  the  case  to  a  master  in 
chancery  to  make  the  appointment.  And  it  was  held  that 
the  order  of  reference  should  authorize  the  master  to  ap- 
point a  receiver  of  all  the  property,  equitable  interests, 
things  in  action  and  effects  belonging  to  the  debtor,  or  in 

i  Todd  v.  Crooke,  4Sandf.,  694.  3  Fuller  v.  Taylor,  2  Halst.  Ch., 


301. 


2  See  Browning  v.  Bettis,  8  Paige, 
568;  Bloodgood  v.  Clark,  4  Paige,        *  Bailey  v.  Lane,  15  Ab.  Pr.,  373, 
574.    But   see  Dollard  v.  Taylor,    note. 

33  N.  Y.  Supr.  Ct.  R.,  496.  5  Dollard   v.    Taylor,  33   N.    Y. 

Supr.  Ct.  R,  496. 


CHAP.  XII.]  CREDITORS.  3S5 

which  he  had  any  beneficial  interest  when  the  suit  was  in- 
stituted, except  such  articles  of  personal  property  as  were 
by  law  exempt  from  sale  on  execution,  and  should  require 
the  master  to  take  from  the  receiver  the  requisite  security 
for  the  faithful  performance  of  his  trust.  It  should  also 
require  the  defendant  to  assign  to  the  receiver,  under  the 
direction  of  the  master,  all  his  property  and  effects,  and 
should  give  the  plaintiff  leave  to  examine  the  debtor,  or  any 
other  person,  on  oath  before  the  master  for  any  of  the  pur- 
poses of  the  reference.1  Under  such  an  order  of  reference, 
however,  the  plaintiff  was  not  authorized  to  examine  the 
defendant,  or  any  other  person,  as  to  matters  not  connected 
with  the  receivership,  or  with  ascertaining  the  possession, 
nature,  value  or  character  of  the  property  which  was  to  be 
assigned  to  the  receiver.  Plaintiff  could  not,  therefore,  ex- 
amine the  debtor  merely  for  the  purpose  of  determining 
whether  he  had  made  a  fraudulent  assignment  of  his  prop- 
erty previous  to  the  commencement  of  the  action,  when  such 
property  was  no  longer  in  his  possession.2  The  chief  pur- 
pose of  such  an  examination  was  to  ascertain  what  property 
the  debtor  had  under  his  control  and  in  his  possession,  in 
order  that  it  might  be  delivered  to  the  receiver  for  the  ben- 
efit of  the  creditor.  The  receiver  was  not  authorized,  by 
virtue  of  his  appointment,  to  seize  such  property  as  he 
might  upon  his  own  judgment  deem  that  of  the  debtor,  but 
this  was  to  be  determined  by  the  examination  before  the 
master,  it  being  the  receiver's  duty  simply  to  take  such 
property  as  might  be  specified  by  the  master,  thus  avoiding 
collisions  between  the  receiver  and  adverse  claimants.3 

§  416.     While,  as  we  have  thus  seen  in  the  preceding  sec- 
tions, courts  of  equity  are  inclined  to  a  liberal  exercise  of  their 


1  Green  v.  Hicks,  1  Barb.  Ch.,  309.  also,  as  to  the  practice  on  such  ex- 

Ancl  see  this  case  as  to  the  practice  animations,  Dickerson  v.  Van  Tine, 

under  such  orders  of  reference,  and  1  Sandf.,  724. 

as  to  the  extent  and  scope  of  the  2  Green  v.  Hicks,  1  Barb.  Ch.,  309. 

examination    of    the    debtor    per-  3  Dickerson  v.  Van  Tine,  1  Sandf., 

mitted  under  the  reference.     See,  724. 
25 


386 


KECEIVEKS. 


[CHAP.  XII. 


jurisdiction  by  granting  receivers  over  the  estate  of  a  debtor 
in  behalf  of  his  judgment  creditors,  this  extraordinary  power 
is  exercised  with  a  considerable  degree  of  caution  when 
the  contest  is  as  to  the  title  to  real  estate,  which  is  in  pos- 
session of  and  claimed  by  third  parties.  Indeed,  courts  of 
equity  are  always  averse  to  any  interference  with  the  legal 
title  in  limine,  and  when  a  creditor's  judgment  is  not  of 
itself  a  hen  upon  lands  which  have  been  conveyed  by  the 
debtor  to  third  parties,  and  the  only  equity  of  the  judgment 
creditor  is  a  right  to  resort  to  the  lands  by  setting  aside  the 
conveyance  from  the  debtor,  the  party  in  possession  under 
what  purports  to  be  the  legal  title  will  not  be  deprived  of 
his  possession  by  the  appointment  of  a  receiver,  unless  upon 
a  strong  case  of  danger  to  the  property  and  inability  to  re- 
spond to  a  decree  because  of  insolvency.1    And  when  a 


iVause  v.  Woods,  46  Miss.,  120. 
This  was  an  appeal  froni  an  order 
of  the  Chancellor,  appointing  a  re- 
ceiver upon  a  creditor's  bill,  to  take 
into  possession  lands  alleged  to 
have  been  conveyed  in  fraud  of 
plaintiff,  an  administrator,  and  of 
his  intestate  in  his  life-time.  The 
court,  Simrall,  J.,  say,  p.  128:  "As 
against  the  legal  title,  the  interpo- 
sition is  with  reluctance;  it  will 
only  be  done  in  case  of  fraud 
clearly  proved,  and  danger  to  the 
property.  Lloyd  v.  Passingham, 
16  Yes.  Jr.,  68,  which  was  a  case 
between  two  claimants  of  the  title. 
A  summary  of  the  doctrine  is 
stated  by  the  Chancellor  in  Mays  v. 
Rose,  Freem.  Ch.,  718,  to  the  effect 
that  the  plaintiff  must  show  a  clear 
right  to  the  property,  or  that  he 
has  some  Hen  upon  it,  or  that  the 
property  constitutes  a  special  fund, 
to  which  he  may  resort  for  satis- 
faction, or  that  the  property  is  ex- 
posed to  loss  or  waste.  It  was  said 
by  Lord  Eldon,  in  Jones  v.  Pugh,  8 


Ves.,  71,  that  if  real  estate  is  as- 
sets, and  the  court  can  not  avoid 
seeing  that  it  and  the  rents  and 
profits  must  be  responsible,  it  will 
put  a  receiver  on  the  estate.  Walker 
v.  Benne,  2  Ves.  Jr.,  170.  By  the 
laws  of  this  state,  the  property  of 
a  decedent  is  chargeable  with  his 
debts,  primarily  the  personalty, 
and,  secondarily,  the  lands;  not, 
however,  in  the  sense  that  creditors 
have  a  specific  hen,  but  in  the 
sense  that  creditors  can  subject 
both  to  then*  debts.  The  descent 
to  the  heir,  or  the  right  of  the 
devisee,  is  liable  to  be  divested,  if 
the  real  estate  is  required  to  pay 
debts.  The  gravamen  of  the  bill 
is,  that  the  deeds,  or  other  instru- 
mentalities by  which  the  real  es- 
tate of  Williarn  G.  Vause  was 
passed  to,  and  vested  in,  the  de- 
fendants, or  some  of  them,  was 
prompted  by  covin  and  fraud,  to 
evade  the  debt  due  to  the  com- 
plainants' intestate ;  and,  therefore, 
said  real  estate  is  as  much  bound 


CHAP.  XII.] 


CEEDITOKS. 


3S7 


judgment  creditor  had  obtained  a  conditional  order  for  a 
receiver  over  certain  real  property,  alleged  to  belong  to  the 
debtor,  but  it  was  shown  that  the  debtor  had  no  such  estate 
in  the  lands  as  was  claimed  by  the  creditor  in  his  petition, 
having  at  the  most  but  an  equitable  interest  in  some  portion 
of  them,  it  was  regarded  as  sufficient  cause  for  refusing  to 
make  the  order  for  the  receiver  absolute,  the  order  having 
covered  the  entire  property.1 

§  417.  Where,  however,  a  debtor  has  a  life  interest  in 
certain  real  estate,  upon  which  he  has  with  his  own  funds 
erected  a  building  and  receives  the  rents  thereof,  upon  a 
bill  by  a  judgment  creditor  the  court  may  appoint  a  re- 
ceiver of  the  rents  to  apply  them  in  payment  of  the  judg- 
ment, although  the  real  estate  itself  is  held  by  trustees  and 
the  judgment  is  no  lien  thereon,  since  equity  will  not  per- 
mit a  debtor  to  thus  evade  the  payment  of  his  just  obliga- 


tor the  debt  as  though  such  con- 
veyances had  never  been  made. 
The  judgment  conferred  no  lien  on 
these  lands.  The  equity  of  the 
complainants  is,  a  right  to  resort  to 
the  lands,  by  setting  aside  these 
conveyances.  The  title  of  the  de- 
fendants is  a  valid,  legal  title,  as 
against  all  others  than  the  creditor. 
If  the  property  were  worth  more 
than  the  debt,  there  would  be  no 
reason  to  put  the  estate  in  the  cus- 
tody of  a  receiver,  unless  the  de- 
fendants were  committing  waste, 
and  deteriorating  its  value.  The 
court  will  not  interpose  for  a  mort- 
gagee, except  upon  the  ground  that 
the  property  is  insufficient  to  pay 
his  debt,  and,  therefore,  he  should, 
pending  litigation,  have  the  rents 
and  income.  Ligon  v.  Bishop  et 
al,  43  Miss.,  527.  Nor  will  a  re- 
ceiver be  appointed  against  an  ex- 
ecutor, on  slight  grounds.     There 


must  be  abuse  of  the  trust,  or  dan- 
ger of  insolvency.  Middleton  v. 
Dodswell,  13  Ves.,  266.  The  juris- 
diction is  exerted  as  part  of  the 
preventive  justice  of  the  court, 
mainly  in  order  that  the  fund  or 
property  exposed  to  spoliation,  and 
danger  of  loss,  pending  the  litiga- 
tion, may  be  taken  charge  of  by 
the  court,  so  as  to  abide  the  litiga- 
tion. Where  the  contest  is  over 
the  title,  the  defendant,  if  he  has 
apparently  and  ostensibly  the  legal 
title,  will  not  be  deprived  of  pos- 
session unless  upon  a  very  strong 
case  of  risk  of  loss  of  the  property, 
and  inability  to  respond  from  in- 
solvency to  the  decree.  We  have 
thought  it  proper  to  refer  to  these 
general  principles  which  govern 
the  jurisdiction  of  the  court." 

1  Tredennick  v.  Graydon,  1  Dr.  & 
War.,  316. 


SSS  RECEIVERS.  [CHAP.  XII. 

tions.1  Nor  will  the  courts  permit  a  judgment  debtor  who 
occupies  the  position  of  a  cestui  que  trust  of  lands,  under  a 
trust  created  for  his  own  benefit,  to  invest  his  individual 
property  by  building  upon  the  land,  and  thus  create  a  trust 
in  his  own  property  for  his  own  benefit,  to  the  prejudice  of 
his  creditors.2 

§  418.  It  was  the  doctrine  of  the  English  Court  of  Chan- 
cery, that  upon  a  bill  by  creditors  claiming  satisfaction  out 
of  both  the  real  and  personal  estate  of  their  debtor,  if  it 
appeared  probable  from  defendant's  answer  that  there  was 
no  personal  estate,  and  both  the  realty  in  defendant's  pos- 
session and  its  rents  and  profits  must  become  responsible  for 
the  demands,  the  court  might  allow  a  receiver  in  the  first 
instance,  although  the  power  was  recognized  as  a  delicate 
one.3  And  upon  a  bill  by  creditors  for  satisfaction  out  of 
the  personal  assets,  and,  if  these  should  prove  insufficient, 
out  of  realty  which  had  descended  to  an  infant  heir,  a  re- 
ceiver has  been  allowed  over  the  real  estate.4  So  upon  a 
bill  by  creditors  for  a  sale  of  real  estate  for  the  payment  of 
their  demands,  the  heir  at  law  being  an  infant,  a  receiver 
was  granted  on  application  of  the  plaintiffs.5  But  where 
an  incumbrancer  seeks  the  aid  of  equity  by  a  receiver  over 
real  estate  of  a  defendant,  and  there  are  judgment  creditors 
of  the  defendant  in  possession,  the  appointment  will  be 
made  without  prejudice  to  the  rights  of  such  judgment 
creditors.6  And  a  judgment  creditor  in  possession  will  not 
be  ordered  to  attorn  to  a  receiver  subsequently  appointed.7 

§  419.  It  has  elsewhere  been  shown,  in  discussing  the 
subject  of  receivers  over  mortgaged  premises,  that  the  courts 
are  always  reluctant  to  interfere  with  the  title  of  a  mort- 

i  Johnson  v.  Woodruff,  4  Halst.  4  Sweet  v.  Partridge,  Dick.,  696. 

Ch.,  120,  affirmed  on  appeal  to  the  5  Sweet  v.  Partridge,  1  Cox,  433. 

Court  of  Errors  and  Appeals,  id.,  6 Davis  v.  Duke  of  Marlborough, 

729.  1  Swans.,  74. 

-  Johnson  v.  Woodruff,  4  Halst.  7  Davis  v.  Duke  of  Marlborough, 

Ch.,  120.  2  Swans.,  118. 

3  Jones  v.  Pugh,  8  Yes.,  71. 


CHAP.  XII.]  CREDITORS.  389 

gagee,  the  general  rule  being  that  a  mortgagee  in  posses- 
sion, to  whom  anything  is  due,  will  not  be  disturbed  by  a 
receiver,  the  rule  being  based  upon  the  reluctance  of  courts 
of  equity  to  interfere  with  the  legal  title.1  And  as  against 
a  mortgagee  in  possession  of  the  premises,  holding  them  as 
security  for  the  payment  of  his  debt,  the  court  will  not  ap- 
point a  receiver  of  the  rents  and  profits,  upon  a  creditor's 
bill  by  a  judgment  creditor  of  the  mortgagor,  when  the 
mortgagee  has  not  been  paid  the  amount  due  him  and  is  able 
to  account  and  respond  for  whatever  he  may  receive.2  So 
when  a  mortgagee  or  trustee  of  certain  property,  which 
has  been  mortgaged  to  him  by  the  debtor  to  secure  debts  due 
to  the  mortgagee  and  other  creditors,  is  proceeding  prop- 
erly in  the  discharge  of  his  trust  by  selling  the  property  and 
applying  the  proceeds  in  payment  of  the  mortgage  indebt- 
edness, a  court  of  equity  will  not  interfere  by  interposing  a 
receiver,  upon  a  creditor's  bill  filed  against  the  debtor  and 
the  mortgagee.3  But  in  an  action  by  a  judgment  creditor 
to  subject  the  debtor's  property  to  the  payment  of  his  debts, 
if  the  property  is  incumbered  by  numerous  mortgages  and 
judgments  which  are  to  be  ascertained  and  their  priorities 
determined,  and  the  real  estate  is  insufficient  to  pay  the  in- 
debtedness, a  receiver  may  be  appointed  to  take  possession 
of  and  to  rent  the  property,  and  to  collect  the  past  due 
rents.4 

§  420.  As  against  mortgagees  of  chattels,  equity  will  ex- 
tend the  aid  of  a  receiver  upon  the  application  of  judgment 
creditors,  if  by  reason  of  the  fraudulent  conduct  of  the 
mortgagee,  or  otherwise,  such  interference  is  necessary  to 
protect  the  rights  of  all  parties  in  interest.5  For  example, 
where  creditors  have  reduced  their  demands  to  judgment 
and  have  levied  upon  a  stock  of  goods  in  the  debtor's  pos- 

1  See  chapter  XV,  post.  See,  also,  Grantham  v.   Lucas,  15 

ZQuinn  v.  Brittain,  3  Edw.  Ch.,  W.  Va.,  425. 

314.  sRosenBevan,  lOMd.,466.   And 

3  Furlong  v.  Edwards,  3  Md.,  99.  see  Gouthwaite  v.  Rippon,  8  L.  J., 

4  Smith  v.  Butcher,  28  Grat.,  144.  N.  S.  Ch.,  139. 


390  KECEIVEKS.  [cHAP-  xn- 

session,  they  are  entitled  to  an  injunction  and  a  receiver  to 
take  charge  of  the  stock,  as  against  the  debtor  and  a  third 
person  claiming  the  goods  as  mortgagee,  upon  a  bill  alleg- 
ing that  the  goods  claimed  to  be  covered  by  the  mortgage 
are  more  than  sufficient  to  pay  the  mortgage  debt,  and  that 
the  debtor  has  no  other  property  out  of  which  the  judgment 
may  be  satisfied ;  the  bill  also  alleging  that  the  mortgagee 
has  permitted  the  debtor  to  use  and  dispose  of  the  goods 
mortgaged,  and  that  a  portion  of  the  stock  levied  upon  is 
not  covered  by  the  mortgage.1  So  where  a  mortgagee  of 
chattels  in  possession,  having  sold  a  part,  and  occupying  as 
to  the  residue  the  position  of  a  trustee  for  other  creditors, 
is  about  to  dispose  of  the  residue  to  the  prejudice  of  a  judg- 
ment creditor  of  the  mortgagor  or  original  debtor,  a  receiver 
may  be  appointed  to  take  the  proceeds  of  the  unsold  prop- 
erty, for  the  purpose  of  protecting  the  rights  of  all  parties 
in  interest.2  But,  under  a  statute  authorizing  a  receiver 
when  the  property  is  in  danger  of  being  lost  or  materially 
injured  or  impaired,  a  debtor  having  executed  a  chattel 
mortgage  of  his  stock  of  merchandise  to  creditors  having 
claims  nearly  equal  in  amount  to  the  value  of  the  stock,  and 
the  mortgagees  having  taken  possession  by  their  agent,  who 
is  selling  the  goods  in  the  usual  course  of  trade,  an  attach- 
ing creditor  who  has  garnished  such  agent  is  not  entitled 
to  a  receiver  over  the  property,  when  it  is  not  shown  that 
it  will  not  be  properly  accounted  for,  or  that  plaintiff's  in- 
terest in  the  proceeds  is  liable  to  be  impaired.3 

§  421.  "When  judgment  creditors  have,  by  their  judgments, 
obtained  a  hen  upon  the  real  estate  of  their  debtor,  but  a 
receiver  is  subsequently  appointed  over  his  effects  and  estate, 
such  creditors  may,  notwithstanding  the  receivership,  main- 
tain an  action  themselves  to  set  aside  as  fraudulent  and  void 
a  mortgage  which  had  been  previously  given  by  the  debtor, 
and  to  apply  the  proceeds  of  the  property  in  satisfaction  of 

1Eose  v.  Bevan,  10  Md.,  466.  3  Silverman  v.  Kuhn,  53  Iowa, 

2Gouthwaite  v.  Rippon,  8  L.  J.,     436. 
N.  S.  Ch.,  139. 


CnAP.  XII.]  CREDITORS.  301 

their  judgments,  especially  when  it  is  alleged  that  the  re- 
ceiver neglects  to  act  in  the  premises.  But  in  such  case,  it 
is  proper  to  make  the  receiver  a  party  defendant  to  the  ac- 
tion brought  by  the  creditors,  since  he  has  an  interest  in  the 
land  subject  to  the  hen  of  the  judgments,  and  is  entitled  to 
the  surplus  avails  of  a  sale  of  the  land,  if  any,  after  satis- 
faction of  the  judgments  which  were  liens  thereon.1  And 
in  England,  when  a  mortgagee  of  the  rates  and  tolls  of  a 
corporation  has  obtained  a  receiver  in  aid  of  the  enforce- 
ment of  his  mortgage,  a  judgment  creditor,  though  subse- 
quent to  the  mortgage,  ma}r  issue  an  elegit  upon  his  judgment, 
but  without  prejudice  to  the  rights  of  the  receiver  already 
appointed,  or  of  any  other  receiver  who  may  be  appointed 
by  the  mortgagee.2  But  a  judgment  creditor  in  possession 
will  not  be  ordered  to  attorn  to  a  receiver  subsequently  ap- 
pointed in  behalf  of  an  incumbrancer.3 

§  422.  Keal  estate  in  possession  of  a  receiver,  appointed 
upon  a  bill  by  a  judgment  creditor  to  have  property  of  the 
debtor  applied  in  satisfaction  of  his  judgment,  is  regarded 
as  being  strictly  in  custody  of  the  court,  to  abide  the  final 
decree  which  may  be  rendered  in  the  cause.  And  in  order 
that  the  court  may  bo  enabled  properly  to  administer  the 
fund,  no  sale  of  the  property  will  be  allowed  on  execution 
under  another  judgment,  without  leave  of  the  court  first 
obtained  for  that  purpose.  And  where  such  sale  was  at- 
tempted without  leave  of  court,  it  was  held  void,  and  that  it 
passed  no  title  to  the  purchaser.4 

1  Gere  v.  Dibble,  17  How.  Pr.,  31.  it,  without  the  leave  of  the  court 

2  Potts  v.  "Warwick  and  Birming-  first  obtained,  will  be  a  contempt 
ham  Canal  Navigation  Co.,  Kay,  on  the  part  of  the  person  making 
142.  it.  This  was  held  in  Angel  v.  Smith, 

3  Davis  v.  Duke  of  Marlborough,  9  Ves.,  335,  both  with  respect  to  re- 
2  Swans.,  118.  ceivers  and  sequestrators.     When, 

4  Wiswall  v.  Sampson,  14  How.,  therefore,  a  party  is  prejudiced  by 
52.  Mr.  Justice  Nelson,  delivering  having  a  receiver  put  in  Ins  way, 
the  opinion,  observes  as  follows,  p.  the  course  has  either  been  to  give 
65 :  "  "When  a  receiver  lias  been  ap-  him  leave  to  bring  an  ejectment,  or 
pointed,  his  possession  is  that  of  the  to  permit  him  to  be  examined  pro 
court,  and  any  attempt  to  disturb  interesse  suo.      1    J.   &   W.,    176, 


592 


RECEIVERS. 


[chap.  XII. 


§  423.     "When  a  debtor  makes  an  assignment  of  all  his 
property,  real  and  personal,  for  the  benefit  of  his  creditors, 


Brooks  v.  Greathed;  Daniell's  Pr., 
eh.  39,  §  4.  And  the  doctrine  that 
a  receiver  is  not  to  be  disturbed  ex- 
tends even  to  cases  in  which  he  has 
been  appointed,  expressly  without 
prejudice  to  the  rights  of  persons 
having  prior  legal  or  equitable  in- 
terests. And  the  individuals  hav- 
ing such  prior  interests  must,  if 
tbey  desire  to  avail  themselves  of 
them,  apply  to  the  court  either  for 
liberty  to  bring  ejectment  or  to  be 
examined  pro  intcresse  suo;  and 
this  though  then  right  to  the  pos- 
session is  clear.  1  Cox,  422 ;  6  Ves. , 
287.  The  proper  course  to  be  pur- 
sued, says  Mr.  Daniell,  in  his  val- 
uable treatise  on  Pleading  and 
Practice  in  Chancery,  by  any  per- 
son who  claims  title  to  an  estate 
or  other  property  sequestered, 
whether  by  mortgage  or  judgment, 
lease  or  otherwise,  or  who  has  a 
title  paramount  to  the  sequestra- 
tion, is  to  apply  to  the  court  to  direct 
the  plaintiff  to  exhibit  interroga- 
tories before  one  of  the  masters,  hi 
order  that  the  party  applying  may 
be  examined  as  to  his  title  to  the 
estate.  An  examination  of  this 
sort  is  called  an  examination  pro 
interesse  suo;  and  an  order  for  such 
examination  may  be  obtained  by  a 
party  interested  as  well  where  the 
property  consists  of  goods  and  chat- 
tels, or  personalty,  as  where  it  is 
real  estate.  And  the  mode  of  pro- 
ceeding is  the  same  in  case  of  the 
receiver.  6  Ves.,  287 ;  9  id.,  336 ;  1 
J.  &  W.,  178;  Daniell's  Pr.,  ch.  39, 
§  4.  A  party,  therefore,  holding  a 
judgment  which  is  a  prior  lien 
upon  the  property,  the  same  as  a 


mortgagee,  if  desirous  of  enforcing 
it  against  the  estate  after  it  has 
been  taken  into  the  care  and  cus- 
tody of  the  court  to  abide  the  final 
determination  of  the  litigation,  and 
pending  that  litigation,  must  first 
obtain  leave  of  the  court  for  this 
purpose.  The  court  will  direct  a 
master  to  inquire  into  the  circum- 
stances, whether  it  is  an  existing 
unsatisfied  demand,  or  as  to  the 
priority  of  the  hen,  etc.,  and  take 
care  that  the  fund  be  applied  ac- 
cordingly. .  .  It  has  been  argued 
that  a  sale  of  the  premises  on  exe- 
cution and  purchase,  occasioned  no 
interference  with  the  possession  of 
the  receiver,  and  hence  no  contempt 
of  the  authority  of  the  court,  and 
that  the  sale,  therefore,  in  such  a 
•case,  should  be  upheld.  But,  con- 
ceding the  proceedings  did  not  dis- 
turb the  possession  of  the  receiver, 
the  argument  does  not  meet  the 
objection.  The  property  is  a  fund 
in  court,  to  abide  the  event  of  the 
litigation,  and  to  be  applied  to  the 
payment  of  the  judgment  creditor, 
who  has  filed  Ins  bill  to  remove  im- 
pediments in  the  way  of  his  execu- 
tion. If  he  has  succeeded  in 
establishing  his  right  to  the  appli- 
cation of  any  portion  of  the  fund, 
it  is  the  duty  of  the  court  to  see 
that  such  application  is  made.  And 
in  order  to  effect  this,  the  court 
must  administer  it  independently 
of  any  rights  acquired  by  third  per- 
sons, pending  the  litigation.  Other- 
wise, the  whole  fund  may  have 
passed  out  of  its  hands  before  the 
final  decree,  and  the  litigation  be- 
come fruitless.    It  is  true,  in  ad- 


CHAP.  XII.]  CREDITORS.  393 

and  upon  a  judgment  subsequently  obtained  against  him 
and  a  creditor's  bill  filed  thereon,  the  assignment  is  set  aside 
as  fraudulent  and  void,  and  the  debtor  and  his  assignees  are 
directed  to  assign  and  deliver  all  the  property  to  the  receiver 
appointed  under  the  creditor's  bill,  upon  compliance  with 
such  order  the  title  to  the  realty  becomes  vested  in  the  re- 
ceiver. A  judgment,  therefore,  obtained  against  the  debtor, 
after  the  assignment  from  him  to  the  receiver,  does  not  be- 
come a  hen  upon  the  land.  And  in  a  contest  between  pur- 
chasers at  a  sheriff's  sale  under  such  subsequently  acquired 
judgment,  and  purchasers  at  a  sale  of  the  same  property  by 
the  receiver,  the  latter  will  be  held  to  have  the  title,  since 
the  lien  of  the  judgment  never  having  attached  upon  the 
property,  its  sale  under  execution  could  confer  no  title  upon 
a  purchaser.1 

§  424.  The  rule  is  otherwise,  however,  when  the  pur- 
chaser at  the  sheriff's  sale  purchases  under  a  judgment  re- 
covered against  the  debtor  prior  to  his  assignment  of  his 
property  to  the  receiver,  even  though  such  judgment  be  of 
a  later  date  than  that  on  which  the  creditor's  bill  was  filed 
and  the  receiver  appointed.  And  in  such  a  case,  as  between 
the  purchaser  at  the  sheriff's  sale,  and  a  purchaser  under  the 
receiver,  the  former  will  acquire  the  title.  The  reason  for 
the  distinction  is  found  in  the  fact  that  the  purchaser  at  the 

ministering  the  fund,  the  court  will  the  disposition  of  this  case,  to  hold, 
take  care  that  the  rights  of  prior  that  while  the  estate  is  in  the  cus- 
liens  or  incumbrances  shall  not  be  tody  of  the  court,  as  a  fund  to 
destroyed;  and  will  adopt  the  abide  the  result  of  a  suit  pending, 
proper  measures,  by  reference  to  no  sale  of  the  property  can  take 
the  master  or  otherwise,  to  ascer-  place,  either  on  execution  or  other- 
tain  them,  and  bring  them  before  wise,  without  the  leave  of  the  court 
it.  Unless  the  court  be  permitted  for  that  purpose.  And  upon  this 
to  retain  the  possession  of  the  fund,  ground,  we  hold  that  the  sale  by 
thus  to  administer  it,  how  can  it  the  marshal  on  the  two  judgments 
ascertain  the  interest  in  the  same  was  illegal  and  void,  and  passed  no 
to  which  the  prosecuting  judgment  title  to  the  purchaser." 
creditor  is  entitled,  and  apply  it  J  Chautauque  County  Bank  v. 
upon  his  demand?  .  .  As  we  White,  6  N.  Y.,  236,  reversing  S. 
have  already  said,  it  is  sufficient  for  C,  6  Barb.,  589. 


394: 


RECEIVEKS. 


[chap.  XII. 


receiver's  sale  derives  his  title,  not  under  the  judgment  on 
which  the  receiver  was  appointed,  but  from  the  debtor's 
own  conveyance  of  his  property  to  the  receiver  and  the  sub- 
sequent sale  by  that  officer.  And  since  the  debtor  can  only 
convey  his  property  to  the  receiver  subject  to  the  hen  of 
existing  judgments,  a  sale  under  an  existing  judgment  con- 
fers a  better  title  than  can  be  derived  through  the  debtor 
and  the  receiver.  The  conclusion,  therefore,  to  be  drawn 
from  the  cases,  would  seem  to  be  that  a  receiver  can  not  ac- 
quire title  to  real  property  of  the  debtor  free  from  the  liens 
of  other  judgment  creditors,  when  such  Mens  had  attached 
before  the  assignment  of  his  real  estate  by  the  debtor  to  his 
receiver.1 

§  425.  It  would  seem  that  a  discharge  of  the  debtor  in 
bankruptcy  is  not  a  sufficient  defense  to  a  creditor's  bill 
seeking  a  receiver  for  the  enforcement  of  a  judgment  ac- 
quired after  the  discharge  was  granted,  when  the  defendant 
appeared  and  contested  the  action  in  which  the  judgment 
was  obtained  and  did  not  plead  his  discharge  in  bar,  and 
when  no  application  has  been  made  by  the  debtor  to  have 
the  execution  set  aside  because  issued  upon  a  judgment  re- 
covered subsequent  to  his  discharge.  Under  such  circum- 
stances, the  debtor  having  neglected  to  avail  himself  of  his 
opportunity  to  take  advantage  of  the  discharge  at  the 
proper  time,  he  will  not  be  allowed  to  urge  it  against  the 
appointment  of  a  receiver  upon  the  judgment  remaining  in 
full  force.2 

§  426.  Under  the  English  bankrupt  act  of  1861,  when 
an  insolvent  debtor  has  executed  a  deed  of  inspectorship 
for  the  benefit  of  his  creditors,  covenanting  to  deal  with  his 
property  according  to  the  directions  of  the  inspectors,  upon 
a  bill  filed  by  them  alleging  that  he  is  violating  such  cove- 
nants and  hindering  the  settlement  of  his  affairs  with  his 
creditors,  and  that  he  is  receiving  and  applying  funds  to  his 

!Chautauque    County   Bank   v.        2  Steward   v.    Green,    11    Paige, 
Risley,  19  N.   Y.,  369.     See,  also,    535. 
Shand  v.  Hanley,  71  N.  Y.,  319. 


CHAP.  XII.]  CREDITORS.  395 

own  use,  a  receiver  will  be  appointed  on  the  ground  of  pre- 
venting irreparable  mischief  to  the  creditors.  And  under 
such  circumstances,  the  court  may  properly  interfere  by  a 
receiver,  even  though  the  property  may  ultimately  have  to 
be  distributed  in  bankruptcy,  and  although  the  bankrupt 
court  might  possibly  afford  the  same  relief.1 

§  427.  Equity  will  not  lend  its  aid  by  a  receiver  when 
the  granting  of  the  relief  would  have  the  effect  of  interfer- 
ing with  the  administration  of  the  assets  of  a  deceased 
debtor,  against  whom  the  judgment  was  obtained  in  his  life- 
time. Thus,  in  the  case  of  a  judgment  obtained  and  cred- 
itor s  bill  filed  thereon  during  the  debtor's  life-time,  and  after 
his  death  the  creditor's  suit  is  revived  against  his  adminis- 
trator, the  court  will  not  grant  a  receiver  of  the  effects  of 
the  deceased  upon  the  application  of  plaintiff  in  the  cred- 
itor's suit,  since  the  property  is  to  be  disposed  of  in  due 
course  of  administration  according  to  law,  and  any  priority 
which  plaintiff  may  have  gained  by  filing  his  bill  dies  with 
the  death  of  defendant.2 

§  428.  When  a  judgment  debtor  is  conducting  a  business 
in  the  name  of  his  wife,  and  ostensibly  as  her  agent,  in 
which  he  is  aided  by  his  sons  who  are  minors,  the  business 
being  wholly  conducted  and  managed  by  the  debtor  and 
his  sons,  his  interest  is  regarded  as  sufficient  to  warrant  a 
court  of  equity  in  appointing  a  receiver  to  collect  and  pre- 
serve the  assets,  upon  a  bill  by  a  judgment  creditor  showing 
that  defendants  are  winding  up  the  business,  selling  the 

i  Riches  v.  Owen,  L.  R.,  3  Ch.  if  a  receiver  had  already  been  ap- 
App.,  820.  As  to  the  power  of  a  pointed  and  had  obtained  possession 
court  of  bankruptcy,  after  an  adju-  of  property  or  money  of  the  debtor 
dication  and  before  an  assignee  is  before  Ms  death,  the  court  appoint- 
selected,  to  appoint  a  receiver  for  ing  him,  having  possession  through 
the  temporary  custody  of  the  bank-  its  officer,  would  not  part  with  that 
rupt's  estate,  and  as  to  the  rights  of  possession  to  the  executor  or  ad- 
action  of  such  a  receiver,  see  Lan-  ministrator,  but  would  apply  the 
sing  v.  Manton,  14  Bank.  Reg.,  127.  fund  in  payment  of  the  judgment, 

-Sylvester  v.  Reed,  3  Edw.  Ch.,  due  regard  being  had,  however,  to 

296;  Mathews  v.  Neilson,  id.,  346.  the  statutory  rights  of  other  cred- 

Cut  in  the  latter  case,  it  is  said  that  itors. 


396  RECEIVERS.  [dlAP.  XII. 

property  and  collecting  the  credits.  But  it  is  error,  in  such 
a  case,  to  direct  the  receiver  to  pay  the  creditors  of  defend- 
ants out  of  collections  and  sales  made  by  him,  before  it  is 
finally  determined  whether  they  are  entitled  to  priority  of 
payment  out  of  the  funds ;  since,  even  if  they  are  entitled 
to  priority,  it  is  premature  to  direct  the  payment  before 
their  claims  have  been  ascertained  and  allowed  by  the  court. 
And  before  such  direction  is  given,  an  account  should  be 
taken  and  an  opportunity  afforded  to  prove  the  claims  of 
creditors  upon  the  one  hand,  and  to  contest  them  upon  the 
other.1 

§  429.  Courts  of  equity  sometimes  exercise  a  discretion- 
ary power  as  to  the  amount  of  the  debtor's  property  over 
which  a  receiver  shall  be  appointed,  or  as  to  ordering  an 
immediate  sale  for  the  purpose  of  satisfying  the  demands 
of  judgment  creditors.  And  when  a  receiver  was  appointed 
of  the  effects  of  a  defendant  debtor  in  several  creditors' 
suits,  the  entire  amount  of  the  judgments  being  about 
$1,000,  and  the  receiver  took  possession  of  the  debtor's 
property,  amounting  to  about  860,000,  the  court  was  of 
opinion  that  it  would  be  proper  for  the  receiver  to  forbear 
selling  at  public  auction,  and  he  was  directed  to  stay  such 
sale  until  further  order  of  the  court.2  And  when,  under 
an  act  of  parliament  authorizing  receivers  of  the  property 
of  a  judgment  debtor  in  aid  of  his  creditors  for  the  en- 
forcement of  their  judgments,  the  court  is  vested  with  a 
discretion  in  limiting  the  quantity  of  the  estate  over  which 
the  receiver  shall  be  extended,  it  will  not  appoint  a  receiver, 
for  the  enforcement  of  a  small  demand,  over  the  whole  of 
a  large  estate,  but  only  over  a  portion  sufficient  to  satisfy 
the  indebtedness  within  a  reasonable  period.  And  under 
such  a  statute,  when  a  receiver  has  been  appointed  over  a 
part  of  defendant's  estate,  he  may  be  extended  over  the  re- 
mainder in  behalf  of  another  creditor  who  comes  in  for 
protection,  thus  saving  the  expense  of  a  new  appointment, 

iPftnn  v.  Whiteheads,  12  Grat.,  2Wardell  v.  Leavenworth,  3 
74.  Edw.  Ch,  244. 


CHAP.  XII.]  CREDITORS.  307 

and  such  extension  will  be  regarded  as,  in  effect,  an  original 
appointment.1 

§  430.  As  regards  priority  of  right  between  a  judgment 
creditor  and  a  mortgagee  of  the  debtor,  it  is  held,  where 
the  judgment  is  only  a  hen  upon  the  lands  of  defendant  to 
the  extent  of  such  estate  or  interest  as  defendant  had  in 
them,  that  the  judgment  creditor  is  not  entitled  to  payment 
out  of  funds  received  by  the  receiver,  in  preference  to  in- 
terest due  upon  mortgages  of  the  land  which  are  prior 
to  his  judgment.2 

§  431.  When  a  fund  has  already  come  into  the  hands  of 
the  court  through  the  medium  of  a  receiver,  but  the  bill  on 
which  the  appointment  was  made  is  afterward  dismissed 
upon  demurrer,  a  judgment  creditor  is  entitled  to  a  receiver 
upon  a  bill  showing  a  judgment  and  levy  upon  the  prop- 
erty, and  that  it  is  the  only  property  of  defendant  within 
the  jurisdiction  of  the  court  out  of  which  his  judgment 
can  be  satisfied,  and  that  there  are  conflicting  claims  thereto 
which  may  defeat  his  ultimate  recovery  unless  the  fund  is 
placed  in  the  hands  of  a  receiver.3 

§  432.  As  regards  the  nature  or  specific  kind  of  prop- 
erty over  which  a  receiver  may  be  appointed  for  the  pro- 
tection of  judgment  creditors,  it  would  seem  from  the 
general  scope  and  tenor  of  the  decisions,  that  such  a  re- 
ceivership may  properly  extend  to  property  of  any  nature, 
real  or  personal,  in  which  the  debtor  has  such  an  interest 
as  may  avail  his  creditor.  In  New  Jersey,  it  has  been  held 
,  that  a  receiver  under  a  creditor's  bill  may  be  appointed  to 
take  charge  of  rings  and  jewelry  of  the  defendant,  since 
these  are  articles  usually  worn  upon  the  person,  and  it 
might  be  out  of  the  sheriff's  power  to  lev}^  on  aud  take 


i  Corbet  v.  Mahon,  2  Jo.  &  Lat.,    such  a  case,  Abbott  v.  Stratten,  3 
C71.     And  see,  as  to  priority  and    Jo.  &Lat.,  603. 
right  to  the  rents  as  between  judg-        -  Holland  v.  Cork  &  Kinsale  R. 
ment  creditors  and  mortgagees  in    Co.,  Ir.  Rep.,  2  Eq.,  417. 

s  Fields  v.  Jones,  It  Ga.,  418. 


SOS 


KECEIVEKS. 


[CHAP.  XII. 


possession  of  them.1  And  in  New  York,  on  proceedings 
supplementary  to  execution  under  the  code  of  procedure, 
when  the  debtor  upon  examination  disclosed  certain  prop- 
erty consisting  of  notes  in  an  insolvent  firm,  and  an  interest 
in  an  existing  firm  of  which  he  was  a  member,  the  court 
regarded  it  as.an  eminently  proper  case  for  a  receiver  to 
take  charge  of  the  debtor's  effects  and  to  collect  what  was 
due  to  him.2  In  England,  a  judgment  creditor  of  a  bene- 
ficed clergyman,  whose  judgment  is,  under  acts  of  parlia- 
ment, a  lien  upon  the  benefice  or  living  of  the  clergyman, 
is  entitled  to  the  aid  of  equity  by  a  receiver  to  collect  the 
rents  and  emoluments  pertaining  to  such  living.3 

§  433.  A  receiver  will  not  be  appointed  of  the  effects  of 
a  defendant,  upon  a  bill  filed  by  one  claiming  to  be  a  cred- 
itor, when  the  answer  positively  alleges  that  there  is  noth- 
ing due  from  defendant  to  plaintiff,  and  when  no  other 
creditors  appear  in  support  of  the  application.4  And  when 
the  court  has  reasonable  ground  to  suspect  irregularities  in 
the  judgment  or  execution  on  which  the  creditor's  bill  is 
founded,  it  may  delay  the  application  for  a  receiver  for  a 
sufficient  time  to  enable  the  irregularity  to  be  determined 
in  the  court  where  the  judgment  was  rendered,  with  leave 
to  renew  the  application  at  a  future  time.5  So  the  relief 
will  be  denied  when  the  bill  contains  no  distinct  charges  of 
fraud,  and  when  it  does  not  appear  clearly  and  distinctly 
that  there  is  any  property  or  thing  in  action  to  be  preserved 
for  the  benefit  of  the  judgment  creditor.6  But  when  the 
bill  charges  that  the  judgment  debtor  has  choses  in  action 
and  property  which  should  be  subjected  to  the  payment  of 


1  Frazier  v.  Barnuin,  4  C.  E. 
Green,  316. 

2  Webb  v.  Overniann,6  Ab.  Pr.,92. 
3 Hawkins  v.  Gathercole,  1  Sim., 

N.  S.,  63. 

4Fogarty  v.  Burke,  1  Con.  & 
Law.,  565. 

s  Bank  of  Wooster  v.  Spencer, 
Clarke  Ch.,  386. 


6  First  National  Bank  v.  Gage,  79 
HI.,  207.  See,  contra,  Gage  v. 
Smith,  79  111.,  219,  where  it  is  held 
that  the  appointing  of  a  receiver 
upon  such  a  bill  is  almost  a  matter 
of  course,  as  under  the  former 
chancery  practice  in  New  York 
under  similar  legislation  concern- 
ing creditors'  bills. 


CHAP.  XII.]  CREDITORS.  399 

Lis  indebtedness,  and  the  bill  is  taken  as  confessed  against 
the  debtor,  it  is  not  error  to  appoint  a  receiver.1 

§  434.  The  fact  that  plaintiff  in  a  creditor's  bill,  seeking 
the  appointment  of  a  receiver,  sees  fit  to  waive  the  answer 
of  defendant  under  oath,  affords  no  sufficient  objection  to 
granting  a  receiver  in  the  action,  and  to  making  an  order 
of  reference  for  the  examination  of  defendant  on  oath  before 
a  master  in  chancery,  with  respect  to  the  property  which  he 
is  required  to  assign  to  the  receiver.2 

§  435.  When  a  defendant  in  a  creditor's  bill,  filed  by  a 
receiver  of  the  estate  of  a  deceased  person,  admits  by  his 
answer  a  balance  of  money  in  his  hands  belonging  to  the 
estate  of  the  deceased,  he  should  be  directed  to  pay  the  fund 
into  court  without  waiting  for  a  final  decree.  And  such 
fund  may  either  be  kept  in  the  custody  of  the  court,  or 
invested  under  its  special  direction,  as  the  court  may  see  fit.3 

§  436.  It  is  to  be  observed  that  courts  of  equity  are 
always  averse  to  appointing  receivers  upon  an  ex  parte  ap- 
plication, and  without  clue  notice  to  defendants  whose  rights 
are  to  be  affected.  And  a  receiver  will  not  be  appointed 
ex  jparte  upon  a  creditor's  bill,  when  it  is  not  shown  that 
defendant  has  any  property  of  a  perishable  nature,  or  choses 
in  action  which  are  in  danger  of  being  lost  unless  immedi- 
ately collected;  or  that  any  other  special  circumstances 
exist,  which  render  it  necessary  to  put  a  receiver  in  imme- 
diate possession  of  the  debtor's  property.4 

§  437.  When  there  are  prior  creditors,  parties  to  the 
cause,  having  claims  upon  an  estate  which  is  put  into  the 
hands  of  a  receiver,  although  the  plaintiff  on  whose  applica- 
tion the  receiver  was  appointed  subsequently  dismisses  his 
bill  and  consents  to  the  receiver's  discharge,  the  court  will 
yet  protect  the  rights  of  such  prior  creditors  by  continuing 
the  receiver;  and  it  may  require  them  to  file  a  bill  forth- 
with, as  a  condition  of  thus  affording  them  protection.5 

iRunalsi*.  Harding,  83  111.,  75.  4Sandford  v.  Sinclair,  8  Paige, 

-'  Root  v.  Safford,  2  Barb.  Ch. ,  33.     373,  affirming  S.  C. ,  3  Edw.  Ch. ,  393. 
3  Rutherford  v.  Jones,  26  Ga.  ,150.        5  Murrough  v.  French,  2  Mol. ,  497. 


400  RECEIVERS.  [CHAP.  XII. 

§  438.  Upon  supplementary  proceedings  under  the  code 
of  procedure  in  Wisconsin,  to  enforce  a  judgment  or  decree 
for  alimony  rendered  in  an  action  for  a  divorce,  the  court 
may  appoint  a  receiver  to  take  possession  of  the  effects  of 
defendant  in  the  divorce  proceeding ;  and  the  sheriff's  return 
of  nulla  Una  upon  the  execution  for  alimony,  if  made  and 
signed  before  the  supplementary  proceedings  are  instituted, 
is  sufficient  foundation  therefor,  although  the  execution  is 
not  filed  with  the  clerk  until  after  such  proceedings  are 
begun.  And  the  receiver  thus  appointed  may  maintain  an 
action  to  set  aside  a  fraudulent  conveyance  of  his  real  estate, 
made  by  the  defendant  to  defeat  the  decree  for  alimony.1 

§  439.  A  receiver  has  been  allowed  in  the  Irish  Court  of 
Chancery,  in  aid  of  a  judgment  creditor  who  had  obtained 
a  judgment  in  another  court,  the  security  for  which  was 
only  a  life  estate  which  might  lapse  at  any  moment ;  there 
being  also  large  prior  incumbrances,  and  the  defendant  hav- 
ing sold  his  stock  and  furniture  and  gone  abroad  to  avoid 
payment  of  the  judgment.2 

i  Barker  «.  Dayton,  28  Wis.,  3G7.        2McCraith  v,   Quin,  Ir.  Rep.,  7 

Ea.,  324. 


CHAP.  XII.]  CREDITORS.  401 


II.    Of  the  Receiver's  Title. 

§  440.    Appointment  of  receiver  does  not  divest  previously  acquired 
liens. 

441.  Receiver  acquires  no  title  to  property  of  debtor  which  is  exempt 

from  execution. 

442.  Exemption  extended  to  proceeds  of  insurance;  also  to  judgment 

for  damages  for  seizing  exempted  property. 

443.  Assignment  by  debtor  to  receiver  not  necessary  as  to  personal 

property  and  choses  in  action ;  receiver  may  recover  property 
without  assignment ;  levy  by  sheriff  a  contempt  of  court. 
444  Assignment  only  passes  property  in  which  debtor  has  beneficial 
interest ;  need  not  except  property  held  in  trust  or  previously 
assigned ;  should  except  exempted  property ;  right  of  action 
for  tort  does  not  pass. 

445.  Irregularities  in  appointment  of  receiver  no  justification  for  re- 

fusing to  make  assignment  and  submit  to  examination. 

446.  Formal  assignment  necessary,  though  defendants  swear   they 

have  no  property ;    assignment  resembles  mortgage ;   no  re- 
assignment necessary. 

447.  No  assignment  to  receiver  necessary  under  New  York  code ;  re- 

ceiver only  acquires  right  of  action  as  to  property  previously 
transferred  in  fraud  of  creditors. 

448.  Receiver's  title  prior  to  that  of  judgment  creditor  subsequently 

levying  execution ;  title  not  defeated  by  delay  in  taking  pos- 
session. 

449.  Title  to  choses  in  action  as  between  receiver  and  purchaser ;  title 

acquired  by  receiver  under  code  of  procedure. 

450.  Receiver  takes  no  title  to  income  of  inalienable  trust  fund  accru- 

ing after  appointment. 

451.  Receiver  takes  estate  by  curtesy  in  New  York,  and  may  recover 

rents. 

452.  Effect  of  debtor's  death  before  appointment  actually  made. 

§  440.  In  considering  the  nature  of  the  title  to  the 
debtor's  property  and  estate,  which  is  acquired  by  a  receiver 
appointed  in  behalf  of  judgment  creditors,  the  first  principle 
to  be  observed  is  that  the  appointment  of  the  receiver  does 
not  operate  to  divest  liens  previously  acquired  on  the  prop- 
erty of  the  debtor  by  other  creditors  acting  in  good  faith. 
The  appointment  is  regarded  as  being  made  subject  to  such 
rights  and  liens  as  may  have  been  previously  acquired  by 

2G 


402  RECEIVERS.  [CHAP.  XII. 

other  judgment  creditors,  who  will  not  be  divested  of  their 
liens  by  virtue  of  the  subsequent  receivership.1    For  ex- 
ample, a  judgment  creditor  is  entitled  to  the  enforcement  of 
his  hen  against  the  personal  property  of  his  debtor,  and  to 
the  fruits  of  a  levy  made  thereon,  notwithstanding  the  sub- 
sequent appointment  of  a  receiver  of  the  debtor's  effects  in 
a  creditor's  suit ;  since,  until  such  appointment  is  actually 
made,  there  is  no  such  lien  by  virtue  of  the  creditor's  suit 
upon  the  personal  property  of  the  debtor,  as  to  prevent  a 
levy  and  sale  under  execution.2    So  when  a  sheriff  has  made 
a  valid  levy  upon  the  debtor's  property  under  a  judgment 
against  him,  and  a  receiver  is  subsequently  appointed  over 
the  debtor's  estate,  the  receiver  takes  his  title  subject  to  the 
rights  acquired  under  the  levy.     And  in  such  a  case,  when 
the  receiver  agrees  with  the  sheriff,  that  if  the  latter  will 
desist  from  sale  under  his  levy  and  will  permit  the  receiver 
to  sell,  he  will  pay  the  plaintiff  in  execution,  or  the  sheriff 
for  his  use,  the  amount  of  such  execution,  if  it  shall  be  de- 
termined that  plaintiff's  levy  was  a  prior  lien,  such  agree- 
ment may  be  enforced  by  action  against  the  receiver.3    So 
creditors,  who  have  by  their  judgments  acquired  a  lien  upon 
their  debtor's  real  estate  prior  to  the  appointment  of  a  re- 
ceiver over  his  estate,  may  maintain  an  action  to  set  aside  a 
fraudulent  mortgage  executed  by  the  debtor ;  since  the  re- 
ceiver's appointment,  being  subsequent  to  the  hen  of  their 
judgments,  does  not  divest  them  of  their  right  of  action.4 
And,  in  general,  it  may  be   said  that  a  receiver  over  a 
debtor's  property  occupies  the  same  relation  toward  the  pro- 
ceeds or  fund  derived  from  the  property  as  the  debtor  him- 
self.5 

§  441.     As  regards  property  of  the  debtor  which  is  ex- 
empt by  law  from  levy  and  sale  under  execution,  the  doctrine 

1  Becker  v.  Torrance,  31  N.  Y.,     193.    And  see  Van  Alstynev.  Cook, 
631;  Davenport  v.  Kelly,  42  N.  Y.,    25  N.  Y.,  489. 

193;  Gere  v.  Dibble,  17  How.  Pr.,  3  Becker  v.  Torrance,  31  N.  Y., 

31.     And  see  Van  Alstyne  v.  Cook,  631. 

25  N.  Y.,  489.  4  Gere  v.  Dibble,  17  How.  Pr.,  31. 

2  Davenport  v.  Kelly,  42.  N.  Y.,  5  Crine  v.  Davis,  68  Ga.,  138. 


CHAP.  XII. J  CREDITORS.  403 

established  by  the  courts  of  New  York  is  that  a  receiver 
appointed  on  proceedings  supplementary  to  execution 
under  the  code,  in  the  nature  of  an  ordinary  creditor's  bill 
under  the  former  chancery  system,  acquires  no  title  by  vir- 
tue of  his  appointment  to  such  property.1  And  the  rule 
holds  good,  even  though  the  order  of  appointment  is  in  gen- 
eral terms,  without  excepting  exempted  property;  since 
such  order,  however  broad  in  its  language,  must  be  under- 
stood as  limited  in  its  operation  by  the  statute  exempting 
the  property  from  execution,  and  the  law  attaches  to  the 
order  and  becomes  a  part  of  it.  A  judgment  debtor  may, 
therefore,  maintain  an  action  against  his  receiver,  for  prop- 
erty taken  by  the  latter  which  is  exempt  from  sale  under 
execution.2 

§  442.  The  doctrine  as  stated  in  the  preceding  section  is 
not  limited  in  its  application  to  the  property  itself  which  is 
exempted  by  law  from  sale  under  judicial  process,  but  ex- 
tends also  to  the  proceeds  of  insurance  realized  upon  the 
property  when  destroyed  by  fire.3  And  when  property  of 
the  debtor,  which  is  exempt  by  law  from  sale  under  execu- 
tion, is  destroyed  by  fire  subsequent  to  the  appointment  of 
the  receiver,  the  right  of  action  for  the  insurance  does  not 
vest  in  the  receiver,  and  he  has  no  interest  therein.4  And  a 
receiver  of  a  judgment  debtor  will  not  be  allowed  an  order, 
directing  the  debtor  to  assign  to  him  a  policy  of  insurance 
upon  furniture  of  the  defendant,  which  was  exempt  from 
execution  and  which  has  been  destroyed  by  fire ;  since,  in 
such  case,  the  debtor  has  not  voluntarily  parted  with  or 
waived  his  right  to  the  exempted  property.5  The  doctrine 
is  also  extended  to  the  case  of  a  judgment  for  damages,  re- 
covered by  the  debtor  against  a  creditor  who  had  seized 

I  Finnin  v.  Malloy,  33  N.  Y.  Supr.        3  Cooney  v.  Cooney,  65  Barb. ,  524 ; 

Ct.  R,  382;  Cooney  v.  Cooney,  65  Sands  v.  Roberts,  8Ab.  Pr.,  343. 
Barb.,  524.    See,  also,  Tillotson  v.        *  Sands  v.  Roberts,   8   Ab.   Pr 

Wolcott,  48  N.  Y.,  188.  343. 

i  Finnin  r.  Malloy,  33  N.  Y.  Supr.        5  Cooney   v.   Cooney,   65    Barb. 

OtR.,382.  524. 


m 


RECEIVERS. 


[chap.  XII. 


and  sold  property  which  was  exempt  from  execution,  the 
judgment  being  regarded  as  representing  the  property,  for 
the  value  of  which  it  was  recovered.  A  receiver,  therefore, 
who  has  collected  such  a  judgment,  will  be  ordered  to  re- 
lease it  in  favor  of  the  debtor.1 

§  443.  Under  the  former  chancery  practice  in  New  York, 
it  was  customary,  upon  the  appointment  of  a  receiver  in  aid 
of  a  creditor's  bill,  to  require  the  defendant  to  execute  an 
assignment  to  the  receiver  of  all  his  property  and  effects, 
and  a  similar  practice  has  been  followed  in  other  states  re 
taining  the  chancery  system.  While  there  was  some  doubt, 
under  the  New  York  decisions,  as  to  whether  such  an  as- 
signment was  not  really  necessary  to  vest  in  the  receiver 
the  title  to  real  estate  of  the  debtor,2  yet  as  regards  per- 
sonal property,  choses  in  action,  and  equitable  interests  of 
the  debtor,  the  assignment  was  regarded  merely  as  a  mat- 
ter of  convenience,  the  established  doctrine  being  that  as  to 
all  such  property  and  interests  the  title  passed  to  the  re- 
ceiver by  virtue  of  his  appointment,  without  the  interven- 
tion of  or  any  necessity  for  a  formal  assignment  from  the 
debtor.3  Especially  was  this  the  case  with  regard  to  equi- 
table interests  and  choses  in  action  in  favor  of  the  debtor, 
as  to  which  it  was  held  that  an  assignment  could  transfer 
no  additional  or  higher  right  than  the  receiver  had  by  vir- 
tue of  his  appointment.4  And  when  a  receiver  was  ap- 
pointed over  the  estate  of  three  defendants  in  a  creditor's 
bill,  only  two  of  whom  joined  in  an  assignment  of  their 
property  to  the  receiver,  he  was  held  to  be  invested  with 
the  title  to  the  personalty,  so  as  to  maintain  an  action  of 
trover  therefor.  Such  a  receiver  was  held  to  have  a  clear 
priority  over  purchasers  of  the  same  property,  under  execu- 
tion on  a  judgment  recovered  subsequent  to  the  appoint- 


iTillotson  v.  Wolcott,  48  N.  Y., 
188. 

2  See  Wilson  v.  Wilson,  1  Barb. 
Ch.,  594. 

*  Storm  v.  Waddell,  2  Sandf.  Ch., 
505 ;   hidings  v.   Bruen,   4  Sandf. 


Ch.,  252;  Wilson  v.  Allen,  6  Barb., 
542.  See,  also,  Mann  v.  Pentz,  2 
Sandf.  Ch.,  272;  Albany  City  Bank 
v.  Schermerhorn,  Clarke  Ch.,  297. 

4Iddings  v.  Bruen,  4  Sandf.  Ch., 
252. 


CHAP.  XII.]  CREDITORS.  405 

ment  of  the  receiver,  and  to  be  entitled  to  recover  the  prop- 
erty from  such  purchasers.1  And  the  property  being  thus 
under  the  control  of  the  court,  through  its  officer  the  re- 
ceiver, the  court  would  not  permit  judgment  creditors  to  levy 
thereon  for  the  satisfaction  of  their  judgments,  and  a  sheriff 
making  such  a  levy  was  held  in  contempt  of  court.2 

§  444.  As  regards  the  property  which  passes  to  the  re- 
ceiver by  virtue  of  an  assignment  from  the  debtor,  under 
an  order  of  court  appointing  a  receiver  of  the  money,  prop- 
erty, things  in  action  and  effects  of  the  defendant,  nothing- 
passes  under  the  general  words  of  assignment,  except  prop- 
erty or  things  in  action  in  which  the  defendant  had  some 
beneficial  interest  at  the  time  of  making  such  assignment. 
It  is  not  necessary,  therefore,  that  it  should  contain  an  express 
reservation  of  property  which  the  debtor  holds  merely  in 
the  character  of  trustee  for  others,  under  a  valid  and  sub- 
sisting trust,  and  in  which  he  has  no  beneficial  interest. 
Nor  is  it  necessary  to  expressly  except  from  the  operation 
of  the  assignment  property  which  the  debtor  had  before 
assigned  to  the  receiver,  who  had  been  appointed  in  a  pre- 
vious creditor's  suit.  Such  an  assignment,  however,  should 
contain  an  exception  reserving  to  the  debtor  such  property 
as  he  is  entitled  to  hold  exempt  from  levy  and  sale  under 
execution ;  and  this  should  be  done,  even  though  the  order 
appointing  the  receiver  and  directing  the  debtor  to  assign 
and  deliver  over  his  property  is  expressed  in  general  terms, 
without  excepting  any  exempted  property.3  But  a  mere 
right  of  action  in  favor  of  a  debtor  for  a  personal  tort,  since 
it  can  not  be  reached  by  plaintiff  in  a  creditor's  bill,  is  not 
an  asset  which  will  pass  to  a  receiver  appointed  on  such  bill, 
by  virtue  of  the  assignment  made  by  the  debtor  to  the 
receiver.4 

§  445.  The  fact  that  there  were  irregularities  in  the  ap- 
pointment of  a  receiver  upon  a  creditor's  bill  in  aid  of  a 

1  Wilson  v.  Allen,  6  Barb.,  542.  3Cagger  v.  Howard,  1  Barb.  Ch., 

'Albany  City  Bank  v.  Schermer-    368. 
horn,  Clarke  Ch.,  297.  *  Hudson  v.  Plets,  11  Paige,  180. 


406  EECEIVERS.  [CHAP.  XII. 

judgment  at  law,  affords  no  justification  upon  a  motion  for  an 
attachment  against  the  defendant,  for  not  appearing  before 
a  master  in  chancery  to  make  an  assignment  of  his  property 
to  the  receiver,  and  to  submit  to  an  examination.  The 
proper  course  for  a  defendant,  desiring  to  take  advantage 
of  such  irregularities,  is  to  move  to  set  aside  the  appoint- 
ment, and  for  an  order  staying  the  proceedings  before  the 
master  in  the  meantime.1 

§  4AG.  When  a  receiver  is  appointed  upon  a  creditor's 
bill,  and  defendants  are  ordered  to  assign  to  him  all  their 
property,  assets,  and  choses  in  action,  they  will  be  com- 
pelled to  make  a  formal  assignment  to  the  receiver  to  en- 
able him  to  test  the  validity  of  any  disposition  which  they 
may  have  made  of  their  property,  and  to  bring  suits  in 
relation  thereto,  even  though  they  have  sworn  that  they 
have  no  property.2  In  such  event,  however,  nothing  will  be 
required  beyond  a  formal  assignment,  unless  it  is  made  to 
appear  by  other  testimony  that  the  debtors  have  sworn 
falsely  as  to  their  property  and  effects.3  And  it  has  been 
held  that  an  assignment  by  a  judgment  debtor  to  a  receiver 
of  his  effects  appointed  on  a  creditors  bill,  partakes  of  the 
nature  of  a  mortgage  for  the  payment  of  the  judgment  and 
costs,  and  when  this  purpose  is  attained  the  assignment  has 
no  further  force,  and  that  no  re-assignment  to  the  debtor  is 
necessary.4 

§  4-iT.  Under  the  ~New  York  code  of  procedure,  upon  the 
appointment  of  a  receiver  of  the  effects  of  a  judgment 
debtor  on  proceedings  supplementary  to  execution,  no  assign- 
ment is  necessary  to  invest  the  receiver  with  the  title  to  the 
debtor's  personal  property  or  choses  in  action ;  since  such 
title  vests  at  once  in  the  receiver  by  virtue  of  his  appoint- 
ment, and  no  subsequent  act  or  assignment  by  the  debtor 
to  a  third  party  can  divest  the  lien  thus  acquired  in  the 

1  Howard  v.  Palmer,  "Walk.  3  Cbiprnan  v.  Sabbaton,  7  Paige. 
(Micb.),  391.  47. 

2  Cbipinan  v.  Sabbaton,  7  Paige,  4  Anderson  v.  Treadwell,  Ed 
47.  mond's  Select  Cases,  201. 


CHAP.  Xn.]  CEEDITORS.  407 

creditor's  suit.1  The  rule  prevails  also  with  regard  to  real 
estate  of  the  debtor,  although  the  contrary  was  formerly 
held,2  and  it  is  now  the  recognized  rule  that  the  receiver,  by 
virtue  of  his  appointment,  becomes  vested  with  all  the  title 
to  the  debtor's  property,  both  real  and  personal,  without  the 
execution  of  any  assignment  from  the  debtor,  no  distinction 
being  made  between  realty  and  personalty.3  The  doctrine, 
however,  would  seem  to  be  limited  to  property  actually  in 
the  possession  of  the  debtor,  and  it  is  held  that  the  appoint- 
ment does  not  invest  the  receiver  with  title  to  property  pre- 
viously transferred  or  assigned  by  the  debtor  in  fraud  of  his 
creditors.  As  to  such  property,  it  is  held,  he  can  acquire  no 
title  by  succession  to  the  rights  of  the  debtor,  since  the 
transfer  is  valid  as  to  him,  and  the  fraudulent  assignee  ac- 
quires a  good  title  to  the  property  as  against  the  debtor  and 
all  other  persons,  except  the  creditors  of  the  debtor.  As 
to  such  property,  therefore,  the  receiver's  only  right  is  a 
right  of  action,  as  trustee  for  the  creditors,  to  set  aside  the 
fraudulent  transfer  and  to  recover  the  property,  for  the 
benefit  of  the  judgment  creditors,  at  Avhose  suit  he  was  ap- 
pointed.4   And  if,  in  such  case,  the  receiver  takes  no  steps  to 

i  Porter  v.  Williams,  5  How.  Pr.,  And  to  the  same  effect  is  Scott  v. 

441 ;  People  v.  Hulburt,  id.,  446 ;  S.  Elmore,  10  Hun,  68.    It  is  believed, 

C,  1  Code  R.,  N.  S.,  75.     And  see  however,  that  the  doctrine  of  these 

Fessenden  v.  Woods,  3  Bosw.,  550.  cases    is  entirely    overthrown    by 

2  See  Moak  v.  Coats,  33  Barb.,  498,  Porter  v.  Williams,  9  N.  Y.,  143. 
where  it  was  held  that  the  title  to  3  Porter  v.  Williams,  9N.Y.,  142 ; 
the  personalty  only  passed  to  the  Wing  v.  Disse,  15  Hun,  190;  Man- 
receiver  by  virtue  of  his  appoint-  ning  v.  Evan?,  19  Hun,  500.  And 
ment,  and  that  the  title  to  the  realty  see  Fessenden  v.  Woods,  3  Bosw., 
did  not  vest  in  him  until  an  assign-  550. 

ment  was  executed  by  the  debtor.  4Bostwick  v.  Menck,  40  N.  Y., 
It  was,  therefore,  held  that  where  383;  Olney  v.  Tanner,  10  Fed.  Rep., 
the  debtor  had  sold  and  conveyed  101,  affirmed  on  appeal,  21  Blatchf., 
real  estate  to  a  purchaser  in  good  540.  And  a  receiver,  under  the  stat- 
faith  and  for  value,  although  after  utes  of  New  Jersey,  may  file  a 
the  receiver  was  appointed,  the  bill  in  his  own  name  to  set  aside  a 
debtor  not  having  made  an  assign-  fraudulent  transfer  of  the  judg- 
ment to  the  receiver,  the  latter  ment  debtor's  property.  Miller  v. 
could  not  maintain  an  action  of  Mackenzie,  29  N.  J.  Eq.,  291. 
ejectment  against  the    purchaser. 


408  EECEIVEKS.  [CHAP.  XII. 

set  aside  such  assignment  until  after  the  debtor  is  adjudi- 
cated a  bankrupt  and  an  assignee  of  his  estate  is  appointed, 
the  receiver  can  not  then  maintain  an  action  to  set  aside  the 
assignment  and  to  recover  the  assets.1 

§  44-8.  Since  a  receiver,  in  proceedings  supplementary  to 
execution,  acquires  title  to  the  debtor's  property  by  virtue  of 
his  order  of  appointment,  which  order  divests  all  the  title 
and  interest  of  the  debtor  and  vests  it  in  the  receiver,  his 
title  takes  precedence  over  that  of  a  judgment  creditor  who 
levies  an  execution  subsequent  to  the  receiver's  appointment. 
The  receiver  may,  therefore,  maintain  an  action  for  the  re- 
covery of  property  so  levied  upon  and  sold,  and  may  recover 
its  value  with  interest  from  the  time  of  sale.  Nor  is  the 
receiver's  title  to  the  property,  or  his  right  of  action  for  its 
recovery,  defeated  because  of  his  delay  in  taking  possession 
until  after  levy  of  the  execution,  when  no  fraud  or  collusion 
is  shown,  and  when  there  is  no  evidence  that  the  delay  of 
the  receiver  in  taking  possession  was  by  the  consent  or  di- 
rection of  the  creditors  at  whose  instance  he  was  appointed.2 

§  449.  As  regards  the  title  to  choses  in  action  of  the 
debtor,  as  between  the  receiver  and  an  assignee  or  purchaser 
from  the  debtor,  who  purchases  subsequent  to  the  filing  of 
the  creditor's  bill  and  with  notice  thereof,  it  was  held,  under 
the  former  chancery  practice  in  New  York,  that  the  title 
acquired  by  the  receiver  was  superior  to  that  of  the  pur- 
chaser, and  would  prevent  the  latter  from  maintaining  a 
bill  in  equity  for  the  enforcement  of  the  chose  in  action.3 
Under  the  code  of  procedure,  it  would  seem  that  a  receiver, 
appointed  in  supplementary  proceedings,  acquires  title  to 
such  property  only  of  the  debtor  as  belonged  to  him  at  the 
time  the  proceedings  were  instituted.4 

§  450.     An  order  appointing  a  receiver  in  a  creditor's  suit 

i  Olney  v.  Tanner,  10  Fed.  Rep.,  3  Weed  v.  Smull,  3  Sandf.  Ch., 

101,  affirmed  on  appeal,  21  Blatchf .,  273. 

540.  4  Campbell    v.    Genet,    2    Hilt., 

2Fessenden  v.  Woods,  3  Bosw.,  290. 
550. 


CHAT.  XII.]  CEEDITOES.  409 

does  not  invest  him  with  title  to  any  part  of  the  income  of 
a  trust  fund,  to  accrue  to  the  debtor  after  the  date  of  the 
receiver's  appointment,  which  fund  is  devised  to  the  debtor 
and  is  inalienable  in  his  hands.1  And  in  New  York,  a  re- 
ceiver appointed  in  proceedings  supplementary  to  execution 
can  not  maintain  an  action  in  the  nature  of  a  creditor's  suit 
to  recover  the  interest  of  the  judgment  debtor  as  a  benefi- 
ciary in  a  trust  fund,  the  trust  having  been  created  by  a  per- 
son other  than  the  debtor,  nor  can  the  receiver  reach  the 
surplus  of  such  fund,  beyond  what  is  required  for  the  sup- 
port of  the  beneficiary.2 

§  451.  In  New  York,  where  the  common-law  estate  by 
curtesy  is  still  recognized,  it  is  held  that  the  estate  thus  ac- 
quired by  the  husband  upon  the  death  of  his  wife  intestate 
after  issue  born,  is  such  an  estate  or  interest  as  will  pass  to 
a  receiver  of  the  husband,  on  proceedings  against  him  by  a 
judgment  creditor.  And  the  receiver  is  entitled  to  recover 
the  rent  due  on  account  of  such  estate  at  the  period  of  his 
appointment,  and  all  rent  accruing  afterward  and  until  the 
expiration  of  his  receivership.3 

§  452.  Under  the  code  of  procedure  in  North  Carolina, 
when  a  receiver  is  appointed  in  supplementary  proceedings 
in  aid  of  a  judgment  creditor,  but  the  debtor  dies  before  the 
appointment  is  actually  made,  the  receiver  does  not  acquire 
title  to  the  debtor's  effects,  and  the  judgment  creditor  does 
not  become  entitled  to  any  priority  therein,  the  laws  of  the 
state  having  fixed  the  distribution  of  the  assets  of  a  de- 
ceased among  his  creditors.4 

1  Graff  v.  Bonnett,  31  N.  Y.,  9,  223.  See,  also,  Manning  v.  Evans, 
affirming  S.   C,   2  Rob.   (N.   Y.),     19  Hun,  500. 

54.  3  Beamish  v.  Hoyt,  2  Rob.  (N.  Y.), 

2  Campbell  v.  Foster,  35  N.  Y.,    307. 

361 ;  McEwen  v.  Brewster,  17  Hun.        « Rankin  v.  Minor,  72  N.  C.  424. 


4:10  EECEIVEES.  [CHAP.  XII. 


III.  Of  the  Receiver's  Functions  and  Rights  of  Action. 

§  453.     Functions  and  duties  fixed  by  order  of  court ;  what  usually  in- 
cluded. 

454.  Receiver  a  trustee  for  creditors ;  may  sue  to  set  aside  fraudulent 

transfers ;  parties  defendant  in  such  suit ;  may  remove  cloud ; 
may  not  enforce  trust. 

455.  Receiver's  rights  of  action  limited  to  extent  necessary  to  satisfy 

judgments ;  can  not  unite  rights  of  subsequent  creditors  with 
former  action. 

456.  Receiver  estopped  by  estoppel  of  creditor. 

457.  Receiver  can  not  take  forcible  possession  of  property  assigned 

to  third  person ;  rights  of  property  to  be  determined  by  action. 

458.  In  action  by  receiver  to  recover  property  assigned,  when  as- 

signees allowed  to  retain  possession;  when  receiver  refused 
injunction  and  receiver. 

459.  Allegations  necessary  in  action  by  receiver  to  set  aside  fraudulent 

assignment ;  debtor  a  proper  party  defendant ;  effect  of  order. 

460.  Receiver  can  not  recover  property  assigned  in  trust  for  payment 

of  debts,  when  trust  partly  fulfilled. 

461.  Priority  as  between  different  judgment  creditors. 

462.  Receivers  in  aid  of  proceedings  in  bankruptcy. 

463.  Receiver  of  corporation  appointed  in  creditor's  suit  can  not  en- 

force subscription  by  shareholder. 

464.  In  action  by  receiver  on  notes,  defendant  can  not  set  off  judg- 

ment against  receiver  on  note  of  debtor. 
464a.  Receiver  entitled  to  letters  patent;  effect  of  sale;  membership 
in  exchange. 

465.  Receiver  may  maintain  action  for  proceeds  of  note  in  hands  of 

third  parties,  applied  on  judgment  against  debtor. 

466.  Interest  devised  to  testator  can  not  be  divested  on  mere  petition 

or  application. 

467.  Action  against  debtor  for  conversion  of  property ;  mortgage  of 

chattels ;  receiver  can  not  maintain  action  for  money  received 
by  debtor  after  appointment. 

468.  Action  by  receiver  to  recover  usurious  payments. 

469.  Acquiescence  in  sheriff's  sale  by  creditor,  effect  of  on  action  by 

receiver. 

470.  Appointment  of  receiver  can  not  be  questioned  in  action  by 

receiver;  rents   received  from  sub-tenants  of  debtor  by  re- 
ceiver should  go  to  landlord. 

471.  Receiver  appointed  by  one  federal  court  can  not  sue  in  another 

to  recover  securities  belonging  to  debtor. 
471  a.  Effect  of  death  of  parties  or  of  receiver. 


CHAP.  XII.]  CREDITOES.  411 

§453.  In  appointing  receivers  over  the  property  and 
effects  of  a  debtor,  upon  the  application  of  his  judgment 
creditors,  it  is  usual  for  the  order  of  appointment  to  fix  in 
g-eneral  terms  the  functions  and  duties  of  the  receiver,  and 
these  are  subject  to  modification  or  enlargement  by  further 
order  of  court,  from  time  to  time,  as  the  exigencies  of  the 
case  may  demand.  These  functions  usually  embrace  the  re- 
ceiving of  whatever  property  and  effects  may  belong  to  the 
debtor;  the  collection  of  debts  and  demands  due  to  him,  and 
the  prosecution  of  suits  for  this  purpose  when  necessary ;  and 
the  payment  into  court  of  the  proceeds,  to  be  applied  in 
satisfaction  of  the  judgment  in  aid  of  which  he  was  ap- 
pointed. And  under  the  rules  of  court  prevailing  under  the 
former  chancery  practice  in  New  York,  a  receiver  appointed 
in  aid  of  a  creditor's  bill  was  vested  with  a  general  power  to 
sue  for  all  demands  due  to  the  debtor.  And  it  would  seem 
that  he  might  institute  such  actions  suo  motu,  merely  obtain- 
ing the  consent  of  the  creditors  for  his  own  protection  as 
to  the  question  of  costs.1 

§  454.  As  regards  the  general  functions  and  rights  of 
action  of  a  receiver  in  proceedings  supplementary  to  execu- 
tion under  the  New  York  code  of  procedure,  and  in  other 
states  which  have  adopted  the  same  practice,  the  established 
doctrine  is,  that  such  receiver  is  not  the  mere  agent  or  rep- 
resentative of  the  debtor,  but  occupies  the  relation  of  a 
trustee  for  the  creditors  in  whose  behalf  he  is  appointed.2 
He  is,  therefore,  entitled  to  enforce  the  rights  of  such  cred- 

i  Green  <y.  Bostwick,  1  Sandf.  Ch. ,  109.  In  Porter  v.  Williams,  9  N. 
185.  As  to  the  right  of  a  receiver  Y.,  142,  it  is  said  that  such  a  re- 
appointed in  proceedings  supple-  ceiver  is  a  "  trustee  for  all  parties," 
mentary  to  execution,  under  the  but  the  language  would  seem  to  be 
New  York  code  of  procedure,  to  too  broad,  in  view  of  the  decis- 
maintain  an  action  for  the  partition  ion  in  Bostwick  v.  Menck,  which 
of  real  estate  of  the  judgment  limits  the  receiver's  functions  to 
debtor,  see  Dubois  v.  Cassidy,  75  those  of  a  representative  or  trustee 
N.  Y.,  298.  for  the  creditors,  in  whose  behalf 

2  Bostwick  v.  Menck,  40  N.  Y.,  he  was  appointed,  excluding  others 

383.     See  Same  v.  Same,  4  Daly,  who  had  not  joined  in  the  proceed- 

68,  reversing  S.  C,  8  Ab.  Pr.,  N.  S.,  ings. 


412 


RECEIVERS. 


[chap.  XII. 


itors  to  the  extent  necessary  for  the  satisfaction  of  their 
demands.1  And  for  this  purpose,  he  may  institute  actions 
in  his  own  name  to  set  aside  fraudulent  assignments  or  trans- 
fers of  his  property,  made  by  the  debtor  with  a  view  of 
defeating  his  creditors,  and  may  recover  the  property  so 
transferred  for  the  purpose  of  applying  it  in  satisfaction  of 
the  judgments.2  And  in  such  case,  the  pendency  of  the 
supplementary  proceedings  is  no  bar  to  the  receiver's  action 
to  set  aside  the  fraudulent  conveyance,  since  the  object  of 
the  former  proceeding  is  to  reach  such  property  of  the  judg- 
ment debtor  as  is  not  claimed  adversely,  while  the  purpose 


1  Bostwick  v.  Menck,  4  Daly,  68, 
reversing  S.  C,  8  Ab.  Pr.,  N.  S.,  169 ; 
Manley  v.  Rassiga,  13  Hun,  288. 

2  Porter  v.  Williams,  9  N.  Y.,  142 
Bostwick  v.  Menck,  40  N.  Y.,  383 
Manley  v.  Rassiga,  13  Hun,  288 
Hamlin  v.  Wright,  23  Wis.,  491. 
But  see,  contra,  Higgins  v.  Gilles- 
heiner,  26  N.  J.  Eq.,  308.  The 
earlier  doctrine  of  the  supreme 
court  of  New  York  was  directly  the 
reverse,  and  it  was  held  that  the 
receiver's  functions  were  limited  to 
the  control  of  property  of  which 
the  debtor  had  possession,  either 
actual  or  constructive,  at  the  time 
of  appointment,  and  that  he  could 
not  maintain  an  action  to  set  aside 
a  fraudulent  assignment  made  by 
the  debtor  prior  to  the  receivership, 
or  to  recover  the  property  so  as- 
signed, and  that  the  remedy  must 
be  sought  in  an  action  by  the  judg- 
ment creditor  himself.  Seymour  v. 
Wilson,  16  Barb.,  294;  Hayner  v. 
Fowler,  16  Barb.,  300.  Seymour  v. 
Wilson  was,  however,  reversed  by 
the  court  of  appeals  on  other 
grounds  (14  N.  Y.,  567),  the  court 
not  passing  upon  any  of  the  points 
decided  below.  And  the  opinion 
of  the  court  of  appeals  in  Porter  v. 


Williams,  9  N.  Y.,  142,  may  be  re- 
garded as  setting  the  question  at 
rest  in  New  York,  and  firmly  es- 
tablishing the  doctrine  enunciated 
in  the  text.  The  court,  Willard,  J., 
say,  p.  150:  "The  act  which  the 
receiver  seeks  to  avoid,  in  this  case, 
was  an  illegal  act  of  the  debtor. 
The  object  of  the  action  is  to  set 
aside  an  assignment  made  by  the 
debtor  with  intent,  as  alleged,  to 
defraud  the  creditor  under  whose 
judgment  and  execution  the  plaint- 
iff was  appointed  receiver,  and  the 
other  creditors  of  the  assignor. 
Such  conveyance  was  void  at  com- 
mon law,  and  is  expressly  forbidden 
by  the  statute.  It  is  void  as  against 
the  creditors  of  the  party  making 
it,  though  good  as  between  him  and 
his  grantee.  The  plaintiff,  repre- 
senting the  interest  of  the  creditors, 
has  a  right  to  invoke  the  aid  of  the 
court  to  set  aside  the  assignment. 
He  stands,  in  this  respect,  in  the 
same  condition  as  the  receiver  of 
an  insolvent  corporation,  or  as  an 
executor  or  administrator,  and  like 
them  can  assail  the  illegal  and 
fraudulent  acts  of  the  debtor  win  ee 
estate  he  is  appointed  to  adminis- 
ter." 


CHAP.  XII.]  CREDITORS.  413 

of  the  latter  is  to  reach  property  claimed  adversely  and 
which  can  not  be  reached  by  the  supplementary  proceed- 
ings. And  in  such  an  action,  it  is  proper  to  join  all  the 
fraudulent  grantees  as  defendants,  since  the  fact  of  their 
being  accessory  to  the  debtor's  fraudulent  attempt  to  place 
his  property  beyond  reach  of  his  creditors,  gives  them  such 
a  common  connection  with  the  subject-matter  of  the  suit  that 
they  may  all  be  joined  as  defendants,  although  they  pur- 
chased at  different  times,  and  each  is  charged  only  with  the 
fraud  in  his  own  purchase.1  Such  a  receiver  may  also  main- 
tain an  action  to  remove  a  cloud  upon  the  title  of  the  judg- 
ment debtor,  and  to  sell  the  property  on  execution  under 
the  judgment  upon  which  the  receiver  was  appointed.2  But 
the  receiver  is  not  the  representative  of  the  creditor  for  the 
purpose  of  enforcing  a  trust  created  by  statute  in  favor  of 
the  creditors  of  a  debtor  who  pays  the  consideration  for 
lands  which  are  conveyed  to  another,  since,  in  such  case,  the 
debtor  acquires  no  legal  or  equitable  interest  in  the  land, 
and  the  creditor  may  proceed  directly  to  enforce  the  trust.3 
§  455.  It  is  further  to  be  observed,  with  reference  to  the 
functions  of  receivers  in  the  class  of  actions  under  consid- 
eration, and  their  right  of  action  to  set  aside  fraudulent  as- 
signments made  by  the  debtor,  that  the  receiver  is  regarded 
as  a  trustee  for  the  creditors  only  in  whose  behalf  he  has 
been  appointed,  and  that  he  can  maintain  his  action  only  to 
the  extent  necessary  to  satisfy  their  judgments,  and  no  fur- 
ther. His  rights  of  action  in  this  respect  are  precisely  such 
as  the  creditors  themselves  might  have  maintained,  and  no 
more ;  and  since  he  succeeds  to  their  rights  of  action,  he 
can  maintain  a  suit  to  set  aside  assignments  in  fraud  of  their 
rights,  only  to  the  extent  necessary  to  satisfy  their  demands 
and  costs,  and  has  no  right  to  interfere  with  the  transfer 


1Hainlin    v.   Wright,    23   Wis.,  requisite  proof    of   the  receiver's 

491.  appointment  in  such  case. 

2  Wright  v.  Nostrand,  94  N.  Y.,  3  Underwood  v.  Sutcliffe,  77  N. 

31.    And  see  this  case   as  to  the  Y.,  58. 


414 


KECEIVERS. 


[chap.  XII. 


beyond  this.1     And  when  the  receiver,  after  instituting  an 
action  to  set  aside  a  fraudulent  conveyance  made  by  the 


^ostwick  v.  Menck,  40  N.  Y., 
383.  See,  also,  Olney  v.  Tanner,  10 
Fed.  Rep.,  101,  affirmed  on  appeal, 
21  Blatchf.,  540;  Goddard  v.  Stiles, 
90  N.  Y.,  199;  Righton  v.  Pruden, 
73  N.  C,  61.  Bostwick  v.  Menck, 
40  N.  Y,  383,  was  an  action  brought 
by  a  receiver  appointed  in  behalf 
of  a  judgment  creditor  to  set  aside 
a  fraudulent  assignment  of  the 
debtor's  property.  The  judgment 
on  which  the  receiver  was  ap- 
pointed was  for  about  $200,  and  the 
decree  directed  the  defendant  to 
pay  over  to  the  receiver  all  the 
avails  of  the  assigned  property, 
amounting  to  $15,000,  except  such 
as  he  had  distributed  under  the 
assignment  before  the  suit  was 
brought.  The  judgment  was  re- 
versed on  appeal,  Grover,  J.,  hold- 
ing as  follows,  p.  385:  ".  .  The 
only  right  of  the  receiver  is,  there- 
fore, as  trustee  of  the  creditors. 
The  latter  have  the  right  to  set 
aside  the  transfer  and  to  recover 
the  property  from  the  fraudulent 
holder,  and  the  receiver  is,  by  law, 
invested  with  all  the  rights  of  all 
the  creditors  represented  by  him  in 
this  respect.  It  is  clear  that  the 
right  of  the  receiver  representing 
the  creditors,  and  acting  in  their 
behalf,  is  no  greater  than  that  of 
the  creditors.  What,  then,  are  the 
legal  and  equitable  rights  of  a  cred- 
itor as  to  property  fraudulently 
transferred?  Manifestly  only  to 
treat  as  void  and  set  aside  such 
transfer,  so  far  as  shall  be  neces- 
sary to  satisfy  his  debt  and  costs. 
He  has  no  right  to  interfere  with 
the  transfer  beyond  this.    When 


his  debt  and  costs  are  paid,  the 
transfer  is  as  valid  as  to  him  as  to 
other  persons.  If  this  be  the  ex- 
tent of  the  rights  of  a  single  cred- 
itor, and  all  that  can  be  conferred 
upon  a  receiver  appointed  by  law 
to  act  as  his  trustee,  it  is  clear  that 
the  right  is  not  enlarged  by  the  ap- 
pointment of  the  same  person  as 
receiver  for  several  creditors.  The 
receiver  is  then  trustee  for  all, 
clothed  with  power  to  set  aside 
transfers  fraudulent  as  against  the 
demands  represented  by  him,  only 
to  an  extent  sufficient  to  satisfy 
such  demands  and  costs.  When 
tins  is  done,  his  duties,  and  conse- 
quently his  powers  and  right  to  act 
further  in  behalf  of  the  creditors, 
cease  as  to  property  that  has  been 
transferred  by  the  debtor.  As  to 
property  owned  by  the  debtor  at 
the  time  of  the  appointment,  we 
have  seen  that  the  rule  is  different ; 
that,  as  to  such  property,  the  ap- 
pointment vests  the  legal  title  to 
the  whole  in  the  receiver,  and  he 
may  consequently  assert  his  title 
thereto  without  regard  to  the 
amount  of  the  judgments  upon 
which  he  has  been  appointed." 
And  Mr.  Justice  James,  in  the  same 
case,  p.  389,  says:  "  It  was  not  the 
purpose  of  this  provision  of  the 
code  to  seize  upon  and  sequestrate 
the  judgment  debtor's  estate  for 
the  benefit  of  all  his  creditors.  Its 
purpose  was  to  furnish  a  cheap  and 
easy  mode  of  discovering  the  con- 
cealed property  of  a  judgment 
debtor,  and  applying  it  to  the  satis- 
faction of  the  judgment  or  judg- 
ments in  which  proceedings  were 


J 


CHAP.  XII.]  CREDITORS.  415 

debtor,  is  appointed  receiver  of  the  estate  of  the  same  debtor 
in  subsequent  proceedings  by  other  judgment  creditors,  he 
can  not  unite  the  rights  of  such  subsequent  creditors  with 
the  former  action  by  a  supplemental  bill  or  complaint.1  So 
the  receiver  being  appointed  only  for  the  benefit  of  the 
judgment  creditor  instituting  the  proceeding,  his  right  of 
action  to  recover  the  debtor's  property  terminates  when  the 
judgment  upon  which  he  was  appointed  is  paid,  and  he  then 
becomes  functus  officio.2  And  it  is  improper  to  direct  the 
receiver  to  pay  other  judgments  than  those  upon  which  he 
was  appointed,  without  notice  to  the  debtor,  and  with  no 
opportunity  to  him  to  be  heard,  since  the  receiver  does  not 
represent  the  debtor  as  to  such  other  judgments.3 

§  456.  The  functions  and  powers  of  the  receiver,  as  re- 
gards rights  of  action  to  set  aside  fraudulent  transfers  made 
by  the  debtor,  being  limited  to  such  rights  of  action  as  the 
judgment  creditor  might  himself  have  maintained,  he  can 
not  effect  a  result  which  the  creditor  himself  could  not  have 
effected;  since  he  stands  in  the  place  of  the  judgment 
creditor,  and  is  limited  by  any  acts  or  conduct  on  his  part 
which  Avould  have  barred  proceedings  by  the  creditor  him- 
self. And  when  the  creditor  is  estopped  by  his  own  act  from 
proceeding  against  the  debtor  or  his  assignee,  to  set  aside  a 
fraudulent  assignment  of  the  debtor's  property,  such  estop- 
pel applies  equally  as  against  the  receiver,  appointed  in  aid 
of  such  creditor.  For  example,  when  a  debtor  purchases 
property  with  the  intention  of  assigning  it  to  defraud 
the  vendor,  and  carries  this  intention  into  execution,  if  the 
vendor,  instead  of  disaffirming  the  sale  and  suing  for  the 
wrongful  conversion,  elects  to  affirm  the  contract  and  sues 
for  the  purchase  price,  after  judgment  thereon  and  the  ap- 

taken.     When  property  enough  to  l  Bostwick  v.  Menck,  4  Daly,  68, 

satisfy  such    judgment    or    judg-  reversing  S.  C,  8  Ab.  Pr.,  N.  S., 

ments  is  reached,  the  purpose  of  the  169. 

appointment  of   a  receiver  is  ac-  2Righton  v.   Pruden,  73  N.  C, 

complished ;  that  officer    owes  no  61. 

uuty   to   other    creditors   of    the  3Goddard   v.   Stiles,    90   N.   Y., 

debtor."  199. 


41 0  RECEIVERS.  [cnAT.  XII. 

pointment  of  a  receiver  in  aid  of  the  judgment,  the  receiver 
Avill  not  be  allowed  to  maintain  an  action  to  set  aside  the 
fraudulent  assignment.1 

§  457.  Since  the  receiver,  in  this  class  of  cases,  is  vested 
with,  the  same  rights  of  action  to  set  aside  fraudulent  trans- 
fers by  the  debtor  as  the  creditors  whom  he  represents,  he 
can  not  take,  or  authorize  others  to  take,  forcible  possession 
of  property  previously  assigned  by  the  debtor  to  a  third 
person,  when  the  property  was  actually  transferred  under  a 
sale  valid  as  between  the  debtor  and  the  vendee.  The  only 
right  of  the  receiver,  in  such  a  case,  is  a  right  of  action  to 
set  aside  the  transfer ;  and  it  constitutes  no  defense  to  an 
action  of  trespass,  brought  by  the  purchaser  of  the  property 
from  the  debtor,  that  the  defendants,  who  had  taken  forci- 
ble possession  of  the  property,  acted  under  the  direction  of 
the  debtor's  receiver.2  The  receiver  can  not  question  such, 
a  transfer  as  representing  the  debtor,  since  the  debtor  him- 
self can  not  impeach  liis  own  completed  act,  however  fraudu- 
lent as  against  creditors.  Nor  can  the  receiver  authorize 
the  forcible  taking  possession  of  the  property  as  represent- 
ing the  judgment  creditors,  since  the  property,  even  though 
transferred  to  delay  and  hinder  such  creditors,  does  not  for 
that  reason  belong  to  them,  or  to  their  representative,  so  as 
to  give  a  right  to  its  immediate  and  absolute  control,  before 
action  brought  to  set  aside  the  transfer.3  So  when  the 
debtor  is  in  possession  of  property,  belonging  to  or  claimed 
by  a  third  person  under  a  title  apparently  valid,  and  which 
is  held  by  the  debtor  as  his  agent,  it  is  improper  by  order  of 
court  to  direct  the  delivery  of  such  property  to  the  receiver, 
since  the  courts  will  not  thus  summarily  dispose  of  or  de- 
termine the  title  to  property  claimed  by  third  parties,  but 
will  leave  the  parties  to  the  appropriate  mode  of  recovering 

•Kennedy  v.  Thorp,  51  N.  Y.,  -  Brown  v.  Gilm  ore,  16  How.  Pr., 

174.     And  see  as  to  the  doctrine  of  527. 

estoppel  in  actions  by  a  receiver,  3  Brown  r.  Gilmore,  1G  How.  Pr., 

Richards  v.  Allen,  3  E.  D.  Smith,  527. 
399. 


CITAP.  XII.]  CREDITORS.  417 

the  property,  in  an  action  by  the  receiver  against  the  person 
claiming  title.1  And  when  the  court  is  fully  authorized  to 
appoint  a  receiver  of  the  debtor's  estate,  who  might  bring 
an  action  to  test  the  title  to  propert\T  in  the  hands  of  a  third 
person,  claiming  title  from  the  debtor,  it  is  improper  to  de- 
termine such  disputed  question  of  title  upon  a  summary 
application,  the  remedy  by  the  appointment  of  a  receiver 
being  the  appropriate  course  to  pursue.2 

§  458.  "When  the  receiver  of  a  judgment  debtor  brings 
an  action  to  set  aside  an  assignment  made  by  the  debtor  for 
the  benefit  of  his  creditors,  it  is  proper  for  the  court  to  per- 
mit the  assignees  to  continue  in  possession,  and  to  dispose 
of  the  property  and  collect  the  debts,  holding  the  proceeds 
subject  to  the  order  of  the  court,  when  no  fraud  is  shown 
as  against  the  assignees,  and  when  they  are  perfectly  solv- 
ent and  able  to  respond  to  any  liability  on  account  of  the 
property  assigned.  The  assignees,  under  such  circumstances, 
will  be  regarded  in  the  light  of  special  receivers,  and  bound 
to  abide  by  such  further  order  as  the  court  may  make  in  the 
premises.3  And  when  the  receiver  institutes  an  action  for 
the  recovery  of  property  assigned  by  the  debtor,  under  a 
voluntary  assignment  for  the  benefit  of  his  creditors,  he  is 
not  entitled  to  an  injunction  and  a  receiver  of  the  assigned 
property,  if  he  fails  to  show  that  the  assignment  was  made 
to  delay,  hinder  or  defraud  the  creditors.4 

§  459.  To  entitle  the  receiver  to  maintain  an  action  to 
set  aside  an  assignment  of  the  debtors  property  for  the 
benefit  of  his  creditors,  it  is  not  sufficient  to  allege  in  his 
pleadings  merely  that  he  was  appointed  receiver  in  the  cred- 
itor's suit,  but  the  judgment  and  other  facts  necessary  to  sus- 
tain the  creditor's  suit  should  be  set  forth.  In  other  words, 
the  receiver  must  state  the  equities  of  the  parties  whom  he 
represents,  in  order  to  maintain  such  an  action,  since  he  is 
only  clothed  with  the  same  rights  of  action  which   might 

'Rodman  v.   Henry,    17  N.  Y.,  3 Spring  v.  Strauss,  3  Bosw. ,  GOT. 

482.  4  Bostwick  v.  Elton,  25  How.  Pr., 

-  Teller  v.  Randall,  40  Barb.,  242.  362. 

27 


418  RECEIVERS.  [CHAP.  XII. 

have  been  maintained  by  the  creditors  whose  representative 
he  is.1  And  in  an  action  by  the  receiver  to  remove  a  cloud 
from  the  title  of  property  of  the  debtor  and  to  subject  it  to 
execution,  the  production  of  an  order  appointing  the  re- 
ceiver, made  by  a  court  of  competent  jurisdiction  and  recit- 
ing the  facts  necessary  to  give  the  court  jurisdiction,  affords 
conclusive  evidence  of  the  regularity  of  the  order  and 
prima  facie  evidence  of  the  facts  necessary  to  confer  juris- 
diction.2 And  in  an  action  brought  by  such  a  receiver,  to 
set  aside  an  alleged  fraudulent  assignment  and  conveyance 
of  the  debtor's  property  to  a  third  person,  the  debtor  him- 
self is  a  proper  party  defendant.3 

§  460.  It  has  been  held  that  where  a  debtor  assigns  his 
property  to  one  of  his  creditors,  upon  condition  that  he  shall 
deduct  his  own  demand  out  of  the  proceeds,  and  then  apply 
the  balance  in  payment  of  the  other  creditors,  and  the 
assignee  sells  and  transfers  the  property  to  a  third  person 
upon  the  same  condition  and  subject  to  the  same  trust,  and 
such  purchaser  fulfills  the  duty  in  part,  a  receiver  of  the 
debtor's  effects,  appointed  in  behalf  of  a  judgment  creditor, 
can  not  maintain  an  action  against  the  purchaser  for  a  bal- 
ance of  the  fund  remaining  in  his  hands.  In  such  case,  it 
being  the  plain  duty  of  the  purchaser  to  distribute  the  fund 
among  the  creditors,  the  receiver  acquires  no  right  of  action 
for  its  recovery.4 

§  461.  As  between  different  judgment  creditors  of  the 
same  debtor,  one  of  whom,  by  his  superior  diligence,  ob- 
tains possession  of  or  a  charge  upon  the  debtor's  property, 
equity  will  not  interfere  in  behalf  of  a  more  dilatory  cred- 
itor to  disturb  such  possession.5  And  this  is  equally  true, 
even  though  the  judgment  of  the  creditor  obtaining  such 
priority  is  later  in  date  than  the  others.6     It  is  held,  there- 

iCoope  v.  Bowles,  42  Barb.,  87;  *  Smith  v.  Woodruff,  1  Hilt.,  462. 

S.  C,  28  How.  Pr.,  10.  5  Bates  v.  Brothers,  2  Sm.  &  G., 

2  Wright  v.  Nostrand,  94  N.  Y.,  509.     See,  also,  Parks  v.  Sprinkle, 

31.  64  N.  C,  637. 

3Palen  v.  Bushnell,  18  Ab.  Pr.,  6  Bates  v.  Brothers,  2  Sm.  &  G., 

301 ;  Allison  v.  Weller,  3  Hun,  608.  509. 


CHAP.  XII.]  CREDITORS.  419 

fore,  in  a  race  of  diligence  between  judgment  creditors  for 
the  property  of  their  debtor,  that  the  one  who  first  insti- 
tutes a  creditor's  suit  and  procures  a  receiver  therein  takes 
priority,  and  is  entitled  to  the  property  of  the  debtor  not 
previously  levied  upon,  as  against  a  creditor  who  has  not 
yet  obtained  a  receiver.1  But  where  judgment  creditors 
claim  a  lien  upon  a  fund  in  the  hands  of  the  receiver  of 
their  debtor,  and  petition  the  court  for  an  order  appropri- 
ating the  fund  in  payment  of  their  judgment,  the  court  will 
not  grant  such  order  hi  limine  and  before  the  other  credit- 
ors  interested  in  the  fund  can  be  heard.  It  is,  however, 
proper  to  restrict  the  receiver  from  paying  out  the  fund,  in 
such  case,  without  notice  to  the  creditors  claiming  the  lien. 
And  the  creditors  claiming  such  lien  may  be  authorized  to 
institute  an  action  against  the  receiver  to  establish  their 
rights.2  So  when,  pending  an  attachment  suit,  a  creditor's 
bill  is  filed  against  the  defendants,  under  which  receivers 
are  appointed  over  their  effects,  plaintiffs  in  the  attachment, 
after  obtaining  judgment,  can  not,  by  a  summary  rule 
against  the  receivers,  compel  payment  in  full  of  their  de- 
mand out  of  funds  of  the  receivership,  before  a  full  hearing 
as  to  the  priorities  of  all  parties  in  interest.3 

§  462.  Under  the  English  practice,  receivers  are  some- 
times appointed  in  aid  of  creditors  who  have  instituted  pro- 
ceedings in  bankruptcy  against  a  debtor;  and  a  receiver 
thus  appointed,  upon  the  application  of  any  one  creditor,  is 
regarded  as  appointed  equally  for  the  benefit  of  all.  Such  a 
receiver,  therefore,  can  not  rightfully  permit  a  payment  to 
be  made  to  the  creditor  on  whose  application  he  was  ap- 
pointed, in  preference  to  the  remaining  creditors,  and  such 
a  payment  will  be  held  fraudulent  and  void  as  against  the 
trustee  of  the  creditors  in  the  proceedings  in  bankruptcy.4 

1  Parks  v.  Sprinkle,  64  N.  C,  637.  debtor    had    assigned    to    a    third 

And  see,  as  to  the  relative  rights  party,  Conger  v.  Sands,   19  How. 

and  liens  of    different    judgment  Pr.,  8. 

creditors  who  have  instituted  sup-  2  Hubbard  v.  Guild,  2  Duer,  685. 

plementary  proceedings  under  the  3  Lowe  v.  Stephens,  66  Ga. ,  607. 

New    York    code    against     their  *  Ex  parte  Jay,  L.  R.,  9  Ch.  App., 

debtor,    in    property    which    the  133. 


420  KECEIVERS.  [CHAP.  XII. 

§  463.  It  has  been  elsewhere  shown,  in  discussing  the 
subject  of  receivers  of  insolvent  corporations  appointed  for 
winding  up  their  affairs  under  the  statutes  of  various  states, 
that  such  receivers  are  frequently  vested  with  the  power  of 
making  assessments  for  and  collecting  unpaid  balances  due 
from  delinquent  shareholders  upon  their  subscriptions  to 
the  capital  stock  of  the  corporation.1  But  this  power  or 
right  of  action  is  derived  wholly  from  statute,  and  does  not 
exist  in  the  absence  of  statutory  authority.  And  it  is  held 
in  New  York,  that  a  receiver  of  a  corporation  appointed  on 
a  creditor's  bill,  and  vested  with  only  the  ordinary  powers 
of  receivers  in  creditors'  suits,  can  not,  by  virtue  of  his  ap- 
pointment, maintain  a  bill  in  equity  against  a  shareholder 
to  enforce  payment  of  a  balance  due  upon  his  subscription 
to  the  capital  stock  of  the  corporation.2 

§  464.  In  an  action  by  the  receiver  of  an  insolvent  debtor 
to  recover  upon  notes  due  to  the  debtor's  estate,  the  maker 
of  such  notes  can  not  set  off  against  the  action  a  judgment 
which  he  has  obtained  against  the  receiver  upon  a  note  exe- 
cuted by  the  judgment  debtor;  since,  to  allow  such  set-off, 
would  be  to  give  the  defendant  a  preference  over  other 
creditors.  His  judgment  against  the  receiver  is  regarded 
only  as  a  legal  determination  of  the  amount  and  validity  of 
his  claim,  and  not  an  adjudication  giving  it  preference  over 
others.3 

1  See  §  324,  ante.  passed  from  the  assignees  to  the 

2  Mann  v.  Pentz,  8  N.  Y.,  415.  receiver  on  the  assignment  being 
And  see,  as  to  the  functions  and  set  aside  as  void  against  creditors, 
powers  of  a  receiver  of  a  moneyed  Defendant  had  obtained  a  judg- 
corporation  appointed  in  behalf  of  ment  on  a  note  of  Sherman's  held 
a  judgment  creditor  under  the  laws  by  him,  and  a  further  judgment 
of  New  York,  Angell  v.  Silsbury,  against  the  receiver,  directing  the 
19  How.  Pr.,  48.  latter  to  pay  such  judgment  out  of 

3  Clark  v.  Brockway,  3  Keyes,  13 ;  the  assets  in  his  hands.  The  court 
S.  C,  1  Ab.  Ct.  Ap.  Dec,  351.  below  denied  the  right  of  set-off 
Clark  v.  Brockway  was  an  action  and  gave  judgment  for  the  receiver 
by  the  receiver  of  the  estate  of  one  for  the  amount  of  the  notes,  and 
Sherman,  to  recover  upon  notes  the  judgment  was  affirmed  on 
executed  by  defendant  to  the  as-  appeal.  Hunt,  J.,  says,  p.  14: 
signees  of  Sherman,  and  which  had  "  The  defendant,  in  his  suit  against 


CHAP.  XII.]  CREDITORS.  421 

§464  a.  A  receiver  over  an  insolvent  debtor,  under  the 
statutes  of  Bhode  Island,  is  entitled,  by  virtue  of  his  ap- 
pointment, to  letters  patent  owned  by  the  debtor,  and 
the  court  may  order  the  debtor  to  make  a  conveyance  to 
the  receiver,  if  necessary  to  fully  invest  him  with  title 
thereto.1  But,  in  the  absence  of  such  a  conveyance,  it  is 
held,  that  a  sale  and  assignment  by  a  receiver  of  the  interest 
of  the  judgment  debtor  in  letters  patent  confers  no  title 
upon  the  purchaser,  such  an  assignment  not  being  a  written 
instrument  signed  by  the  owner  of  the  patent,  as  required 
by  the  act  of  congress,  but  a  mere  assignment  by  opera- 
tion of  law,  and  without  the  action  of  the  patentee  or 
owner.2  But  a  receiver  in  proceedings  supplementary  to 
execution,  in  New  York,  succeeds  to  the  title  of  the  judg- 
ment debtor  in  a  certificate  of  membership  in  the  New 
York  Cotton  Exchange,  and  may  maintain  a  suit  to  redeem 
such  certificate  from  one  to  whom  it  has  been  pledged.3 

§  465.     When  a  receiver  of  the  effects  and  estate  of  a 

the  present  plaintiff,  as  receiver,  compelled  to  accept  a  much  smaller 
and  others,  recovered  a  judgment  proportion.  This  the  law  does  not 
directing  the  receiver  to  pay  the  allow.  Equality  in  the  payment  of 
amount  of  the  notes  held  by  him,  debts  by  a  receiver  is  the  rule  of 
$345.48,  with  the  "costs,  and  he  law,  unless,  by  diligence  or  for 
claims  that  judgment  to  be  decis-  some  special  reason,  a  preference 
ive  of  the  present  suit.  In  this,  I  is  declared  of  one  creditor  or  of  one 
think,  he  errs.  His  judgment  is  a  class  over  creditors  generally.  No 
legal  determination  of  the  validity  such  circumstance  exists  in  this 
of  his  claim,  but  it  does  not  deter-  case,  and  the  judgment  is  to  be  re- 
mine  when  it  shall  be  paid,  or  garded  as  determining  simply  the 
what,  if  any,  shall  be  its  preference  validity  of  the  plaintiff's  claim  on 
over  other  debts.  By  obtaining  an  the  notes  held  by  him.  His  del  it  is 
offset  against  the  notes  in  suit,  the  adjudged  to  be  valid,  but  it  must. 
defendant  would  at  once  obtain  take  its  chances  of  payment  with 
payment  of  his  claim  to  that  other  valid  debts  in  the  general  ad- 
amount,  and  this  without  regard  ministration  of  the  estate  of  V\  m. 
to  the  amount  of  debts  or  assets  Sherman." 
applicable  to  the  general  settlement  l  In  re  Keach,  14  R.  I.,  571. 
of  Win.  Sherman's  affairs.  He  2  Gordon  v.  Anthony,  16  Blatchf., 
might  thus  obtain  a  large  propor-  234. 

tion  or  the  whole  of  his  debt,  while  3  Powell  v.  Waldron,  89  N.  Y., 

others,  equally  entitled,  might  be  328. 


4:22  RECEIVERS.  [CHAP.  XII. 

judgment  debtor,  appointed  in  different  creditors'  suits,  be- 
comes vested  with  the  title  to  all  the  debtor's  property 
immediately  upon  the  filing  and  recording  of  his  order  of 
appointment,  he  may  maintain  an  action  for  the  proceeds 
of  a  note  due  to  the  estate  in  the  hands  of  third  parties, 
notwithstanding  they  have,  subsequent  to  the  appointment, 
procured  an  ex  parte  order  of  court  directing  the  note  to  be 
applied  upon  a  judgment  which  they  hold  against  the 
debtor ;  since  the  title  to  the  note  having  vested  in  the  re- 
ceiver, it  is  not  in  the  power  of  the  court  to  divest  his  title 
on  an  application  to  which  he  is  not  a  party.1 

§  4QQ.  A  receiver  of  a  judgment  debtor  can  not,  by 
mere  motion  or  application  to  the  court,  reach  an  interest  in 
property  of  an  inalienable  nature,  which  is  vested  in  the 
debtor  as  cestui  que  trust,  or  devisee  under  a  will.  And 
when  a  testator  has  devised  his  property  to  executors,  in 
trust  to  convert  it  into  money  and  to  divide  it  in  certain 
shares,  one  of  which  is  to  go  to  the  debtor,  the  court  will 
not  grant  the  receiver  an  order  for  the  sale  of  such  interest, 
upon  a  mere  application  or  petition  for  that  purpose.  If  the 
creditors  are  to  derive  any  benefit  from  the  provisions  of 
the  will,  in  such  case,  it  must  be  by  a  proceeding  to  which 
the  executor  is  a  party.2 

§  467.  A  receiver  appointed  in  a  judgment  creditor's  suit 
would  seem  to  have  the  same  rights  of  action  against  the 
debtor  himself,  for  the  conversion  of  his  property,  as  against 
strangers,  and  he  may,  therefore,  maintain  an  action  for  such 
conversion  by  the  debtor.  But  he  acquires  only  such  title 
as  the  debtor  had  at  the  time  of  appointment,  and  if  the 
debtor's  title  was  a  mere  equity  of  redemption  in  mortgaged 
chattels,  and  the  receiver  neglects  to  redeem  the  property 
by  paying  off  the  mortgage,  until  the  right  of  the  mort- 
gagee becomes  absolute,  neither  the  debtor,  nor  the  plaintiff 
as  his  receiver,  has  any  interest  in  the  property  which  can 
be  the  subject  of  a  conversion,  or  sustain  an  action  by  the 

1  Rogers  v.  Corning,  44  Barb.,  229.        2  Scott  v.  Nevius,  6  Duer,  672. 


CHAP.  XII.]  CREDITORS.  423 

receiver.1  And  the  receiver  is  not,  by  virtue  of  his  appoint- 
ment, invested  with  any  title  to  property  which  may  be 
afterward  acquired  by  the  debtor;  he  can  not,  therefore, 
maintain  an  action  for  the  recovery  of  money  received  by 
the  debtor  subsequent  to  the  appointment.2 

§  468.  In  New  York,  it  is  held  that  a  receiver  in  a  cred- 
itor's suit  may  maintain  an  action  for  the  recovery  of  usuri- 
ous payments  made  by  the  debtor  to  a  third  person;  since 
the  receiver  is  the  representative,  not  merely  of  the  debtor, 
but  of  the  creditors,  and  his  title  is,  therefore,  sufficient  to 
maintain  such  an  action.  And  the  judgment  debtor  is  not 
a  necessary  party  to  such  an  action.3 

§  469.  A  receiver  of  a  judgment  debtor  can  not  maintain 
an  action  to  recover  back  the  value  of  property  which  has 
been  sold  at  a  sheriff's  sale  under  executions  against  the 
debtor,  when  the  creditor,  in  whose  behalf  the  receiver  was 
appointed,  was  present  by  his  attorney  and  requested  and 
acquiesced  in  the  sale  by  the  sheriff,  but  afterward  pro- 
cured the  appointment  of  a  receiver,  on  failing  to  obtain 
the  proceeds  of  such  sale,  which  were  diverted  to  the  pay- 
ment of  other  executions  in  the  hands  of  the  sheriff.4 

§  470.  When  a  debtor  voluntarily  appears  in  court,  and 
consents  to  a  receiver  being  appointed  over  his  estate  and 
effects  for  the  benefit  of  his  creditors,  in  an  action  insti- 
tuted by  such  receiver  to  recover  upon  a  demand  due  to  or 
for  property  owned  by  the  debtor,  the  defendant  can  not 
object  to  the  irregularity  in  the  receiver's  appointment,  since, 
the  party  against  whom  the  receiver  was  appointed  having 
consented  to  the  proceedings  and  waived  all  irregularities 
therein,  it  does  not  lie  in  the  mouth  of  his  debtor  or  of  third 
persons   to  question  the  regularity   of  such  proceedings.5 

i  Gardner    v.    Smith,    29  Barb.,  *  Richards  v.  Allen,  3  E.  D.  Smith, 

68.  399. 

2 Graff  v.  Bonnett,  25  How.  Pr.,  5 Tyler  v.  Willis,  33  Barb.,  327; 

470.  S.  C,  sub  nom.  Tyler  v.  Whitney, 

3Palen  v.  Bushnell,  18  Ab.  Pr„  12  Ab.  Pr.,  465;  Powell  v.  Waldron, 

301.  89  N.  Y.,  328;  Green  v.  Bookhart, 

19  S.  C,  466. 


421  DECEIVEKS.  [ciIAr.  XII. 

Kor  can  the  validity  of  tho  receiver's  appointment  be  as- 
sailed, collaterally,  as  in  a  suit  brought  by  him  against 
third  parties,  if  sufficient  jurisdictional  facts  were  shown 
in  the  original  proceeding  for  his  appointment  to  warrant 
the  court  in  the  exercise  of  its  jurisdiction;  since  the  judg- 
ment debtor  being  concluded  so  long  as  the  order  is  unre- 
versed, third  persons  are  also  concluded.1  When  a  receiver 
over  a  judgment  debtor  receives  rents  from  sub-tenants  of 
the  debtor,  for  the  rental  of  premises  of  which  the  debtor 
held  a  lease,  such  funds  are  not  subject  to  distribution 
among  the  creditors  generally,  but  are  reserved  for  the 
landlord  of  the  premises,  whose  equity  is  superior  to  that 
of  all  other  creditors.  And  in  such  a  case,  the  receiver  will 
be  directed  to  pay  the  money  to  the  landlord,  or  to  his  rep- 
resentative, upon  petition  showing  the  facts.2 

§  471.  It  is  held,  that  a  receiver  appointed  on  a  creditor's 
bill  in  a  circuit  court  of  the  United  States,  having  no  right  or 
authority  except  such  as  is  conferred  upon  him  by  the  order 
of  his  appointment,  can  not  maintain  an  action  in  a  federal 
court  in  another  district  to  compel  the  surrender  of  certain 
securities  of  the  debtor  held  by  defendant,  to  be  applied  in 
satisfaction  of  the  judgment  in  aid  of  which  the  receiver 
was  appointed.  Such  a  receiver,  it  is  held,  has  no  extra- 
territorial jurisdiction  or  rights  of  action,  and  the  federal 
court  by  which  he  was  appointed  is  treated,  for  the  pur- 
poses of  such  a  case,  as  a  court  of  local  and  limited  juris- 
diction. Nor  is  his  right  of  action,  under  such  circumstances, 
enlarged  by  the  fact  that,  under  the  statutes  of  the  state  in 
which  he  was  appointed,  receivers  on  creditors'  bills  are 
vested  with  full  title,  and  have  full  authority  to  maintain 
suits ;  since  the  laws  of  the  state  can  not  enlarge  or  alter 
the  effect  of  the  order  of  the  federal  court,  nor  enlarge  the 
jurisdiction  of  that  court.3 

i  Whittlesey  v.  Frantz,  74  N.  Y.,  3Brigham    v.     Luddington,     12 

456.  Blatchf.,  237.     This  was  a  bill  filed 

2  Riggs  v.  Whitney,  15  Ab.  Pr.,  in  the  circuit  court  of  the  United 

388.  States,  for  the  southern  district  of 


CHAP.  XII. J 


CREDITORS. 


425 


§  471  a.  When  a  receiver  is  appointed  in  a  creditor's  suit 
instituted  to  reach  the  property  and  equitable  interests  of 
judgment  debtors,  and  to  subject  them  to  the  payment  of 
the  judgment,  and  the  debtors  assign  their  property  to  the 
receiver,  the  receivership  does  not  terminate  by  the  death 
of  the  receiver,  or  by  the  death  of  the  judgment  debtors. 


New  York,  by  a  receiver  appointed 
on  a  judgment  creditor's  bill  in  the 
circuit  court  of  the  United  States, 
for  the  eastern  district  of  Wiscon- 
sin, seeking  a  recovery  of  certain 
securities  of  the  judgment  debtor, 
and  to  apply  them  in  satisfaction 
of  the  judgment.  Mr.  Justice 
Woodruff  says,  p.  242 :  "I  notice, 
without  enlarging  upon  the  sub- 
ject, a  further  objection,  viz.,  that 
the  complainant,  having  no  right 
or  authority,  except  such  as  was 
conferred  by  an  order  of  the  circuit 
court  of  the  United  States,  for  the 
eastern  district  of  Wisconsin,  can 
not  maintain  this  suit  in  this  dis- 
trict. The  opinion  of  the  supreme 
court  in  Booth  v.  Clark,  17  How- 
ard, 322,  seems  to  me  fully  to  sus- 
tain this  objection.  That  was  an 
action  in  the  circuit  court  for  the 
District  of  Columbia,  by  a  receiver 
appointed  under  a  creditor's  bill 
filed  in  a  court  of  equity  of  the  state 
of  New  York.  He  was  held  not 
entitled  to  sue.  The  suggestion  of 
counsel,  that  the  circuit  court  for 
this  district  and  the  circuit  court 
for  the  eastern  district  of  Wiscon- 
sin, derive  their  authority  from  the 
same  government  and  the  same 
federal  laws,  does  not  meet  the 
difficulty.  The  decision  did  not 
proceed  upon  the  sole  ground  that 
the  jurisdiction  of  New  York  was 
foreign  to  that  of  the  federal  courts ; 
but  on  the  ground  that  such  a  re- 


ceiver could  not  sue  in  another  ter- 
ritorial jurisdiction.  The  circuit 
court  for  this  district  and  the  cir- 
cuit court  for  the  eastern  district  of 
Wisconsin  each  exercises  a  local 
and  limited  jurisdiction,  and  I  am 
not  able  to  withdraw  this  ease 
from  the  operation  of  the  decision 
of  the  supreme  court  above  cited. 
(See,  on  this  subject,  Hope  Mutual 
Life  Ins.  Co.  v.  Taylor,  2  Robert- 
son, 278.)  To  the  suggestion  of 
counsel,  that,  by  the  statutes  of 
Wisconsin,  receivers  appointed  on 
creditors'  bills  are  vested  with  full 
title,  and  have  full  authority,  to 
maintain  suits,  which  this  court 
ought  to  recognize,  it  must  suffice 
to  say :  (1)  This  receiver  was  ap- 
pointed under  and  by  virtue  of  the 
general  power  of  courts  of  equity, 
and  with  such  effect  only  as  is  due 
to  the  order  of  the  court  making 
the  appointment.  He  was  not  ap- 
pointed under  or  by  virtue  of  any 
statute.  (2)  The  statutes  of  the 
state  of  Wisconsin  can  not  enlarge 
or  alter  the  effect  of  an  order  or 
decree  of  the  circuit  court  of  the 
United  States,  nor  enlarge  or  mod- 
ify the  jurisdiction  of  that  court  or 
its  efficiency.  Payne  v.  Hook,  7 
Wal.,  425.  These  vieAvs  render  it 
wholly  unnecessary  to  consider  the 
merits  of  this  suit  or  the  various 
matters  ably  discussed  on  the  hear- 
ing. I  am  constrained  to  conclude 
that  the  bill  should  be  dismissed." 


426  RECEIVERS.  [CHAP.  XII. 

And  while  the  creditor's  suit  abates  by  the  death  of  the 
judgment  debtors,  the  title  to  their  property  is  regarded  as 
vested  in  the  court  itself.  It  is,  therefore,  competent  for  the 
court  to  appoint  a  new  receiver,  who  may  institute  actions 
to  recover  the  estate  of  the  debtors.1 

iNicoll  v.  Boyd,  90  N.  Y.,  516. 


CHAPTER  XIII. 

OF  RECEIVERS  OVER  PARTNERSHIPS. 

I.  Principles  on  Which  the  Relief  is  Granted,    ....    §  472 

II.  Receiver  Upon  Dissolution  of  the  Firm, 509 

III.  Exclusion  from  Firm  as  Ground  for  Receiver,    ....  522 

IV.  Receiver  Upon  Death  of  Partner, 530 

V.  Functions  and  Duties  of  the  Receiver, 538 


I.  Principles  on  Which  the  Relief  is  Granted. 

§  472.     The  jurisdiction  well  established ;  doctrine  of  Lord  Eldon ;  prob- 
ability of  decree  for  dissolution. 

473.  Courts  proceed  with  extreme  caution ;  beneficial  nature  of  the 

relief. 

474.  Receiver  granted  on  same  ground  as  injunction ;  actual  abuse 

necessary ;  dissolution ;  quarrel  between  partners. 

475.  Court  does  not  determine  ultimate  rights  of  the  parties. 

476.  There  must  be  an  actual  partnership  inter  se;  employee,  though 

nominal  partner,  can  not  have  receiver. 

477.  Right  to  participate  in  profits  the  test;    burden  of  proof  on 

plaintiff. 

478.  Defendant  permitted  to  give  security  to  account  to  plaintiff,  in 

lieu  of  receiver. 

479.  Denial  of  partnership  by  defendant  not  alone  sufficient  to  pre- 

vent receiver. 

480.  Not  the  province  of  the  court  to  superintend  the  business. 

481.  Receiver  may  manage  business  pendente  lite;  running  steam- 

boat ;  horses  and  carriages ;  political  paper. 

482.  Courts  will  interfere  only  in  clear  cases;  and  where  there  is 

mismanagement. 

483.  Breach  of  duty  must  be  shown;  irreconcilable  disagreement; 

fraud ;  probability  of  loss. 

484.  Want  of  confidence  as  a  ground  for  receiver. 

485.  Failure  to  co-operate  in  management  of  business  no  ground  for 

receiver ;  unprofitable  business  no  ground  for  relief. 

486.  Appointment  not  a  matter  of  course ;  confidence  between  part- 

ners. 


428  RECEIVERS.  [CHAP.  XIII. 

§  487.  Defendant  resolved  to  break  up  business ;  impossibility  of  con- 
tinuing advantageously. 

488.  Dispute  as  to  firm  property ;  insolvency  and  bad  faith  of  defend- 
ant. 

4S9.  Violation  of  agreement  for  dissolution;  exclusion  from  books; 
embittered  feeling. 

490.  Partner  in  possession  can  not  have  receiver. 

491.  Receiver  not  granted  when  equities  of  bill  denied  by  answer. 

492.  Refused  when  plaintiff's  right  is  not  questioned  or  disturbed. 

493.  Receiver  in  behalf  of  outgoing  partner. 

494.  Receiver  on  judgment  creditor's  bill  after  dissolution. 

495.  Appointment  prevents  preference  to  creditor ;  does  not  interfere 

with  rights  or  liens  of  creditors  already  acquired. 

496.  Failure  to  contribute  to  capital  stock;  sale  of  interest;  insolv- 

ency ;  exclusion  by  purchaser. 

497.  Not  sufficient  to  allege  large  sums  of  money  in  defendant's  hands. 

498.  Receiver  refused  over  shares  of  stock  constituting  entire  assets 

of  firm. 

499.  Use  of  firm  effects  by  remaining  partners  after  dissolution. 

500.  Partnership  for  sawing  lumber ;  failure  to  take  timber  from  land 

of  one  partner. 

501.  When  court  may  direct  issue  to  be  tried  by  jury. 

502.  Courts  averse  to  interfering  ex  parte. 

503.  Jurisdiction  over  foreign  partnerships. 

504.  Partnership  in  working  farm ;  deficiency  in  profits. 

505.  Priority  by  attaching  creditors  before  final  decree. 

506.  Injunction  auxiliary  to  receivership  continued  to  hearing. 

507.  Receiver  granted  as  between  purchasers  or  assignees  of  different 

partners. 

508.  Limited  partnerships. 

508  a.  Effect  of  denial  of  motion  in  former  suit 

§  472.  The  appointment  of  receivers  in  actions  between 
partners  for  an  accounting  and  a  settlement  of  their  part- 
nership affairs,  to  take  charge  of  the  assets,  collect  the  debts 
and  wind  up  the  business  of  the  firm,  is  a  legitimate  exer- 
cise of  the  jurisdiction  of  courts  of  equity,  and  one  which 
is  clearly  sustained  by  the  authorities.1  And  the  power  of 
thus  appointing  a  receiver  in  an  action  for  the  dissolution  of 
a  partnership  and  the  settlement  of  the  firm  business,  is 
regarded  as  essential  to  the  object  sought  by  such  a  suit,  and 
falls  within  that  class  of  incidental  powers  which  the  courts 

1  See  Saylor  v.  Mockbie,  9  Iowa,  209 ;  Jordan  v.  Miller,  75  Va.,  442. 


i 


CHAP.  XIII.]  PAETNEESHIPS.  429 

ha  vine:  jurisdiction  over  such  cases  have  full  authoritv  to 
exercise.1  The  doctrine  of  the  English  Court  of  Chancery, 
as  laid  down  by  Lord  Eldon,  was,  that  the  court  would  not 
take  a  partnership  business  into  its  own  hands  by  the  ap- 
pointment of  a  receiver,  unless  the  suit  was  so  framed  that 
a  decree  could  be  made  at  the  hearing,  either  that  the  busi- 
ness be  carried  on  according  to  the  terms  of  some  instru- 
ment, which  by  agreement  between  the  parties  was  to 
regulate  the  manner  of  conducting  the  busim  ss,  or  that  it 
be  wholly  ended  and  the  partnership  dissolved.-  And  while 
the  tendency  of  the  later  decisions,  especially  in  this  coun- 
try, has  been  averse  to  the  continuance  and  management  of 
a  partnership  business  by  a  receiver,  the  other  element  in 
the  rule  as  laid  down  by  Lord  Eldon,  viz.,  the  probability  of 
a  decree  for  a  dissolution,  is  still  recognized  as  a  control- 
ling element  in  determining  whether  a  receiver  shall  be 
appointed. 

§  473.  The  determination  of  an  application  for  a  receiver, 
upon  a  bill  seeking  the  dissolution  of  a  partnership,  is  justly 
regarded  as  a  matter  of  extreme  delicacy,  and  one  which 
requires  the  most  careful  consideration  upon  the  part  of  the 
court;  since,  if  the  application  is  granted,  its  effect  is  to  ter- 
minate the  partnership  contrary  to  the  wishes  of  the  de- 
fendant partner,  while,  if  refused,  it  leaves  defendant  to 
continue  the  business  at  the  risk  of  great  loss  and  prejudice 
to  plaintiff's  rights.3     But,  while  the  courts  proceed  with 

JGridley  v.  Conner,  2  La,  An.,  87.  motion,  the  effect  of  it  is  to  put  an 

2  Const  v.  Harris,  Turn.  &  R. ,  517.  end  to  the  partnership  which  one  of 

8 New  v.  Wright,  44  Miss.,  202;  the  parties  claims  the  right  to  have 

Madgwick  v.  Wimble,  6  Beav.,  493.  continued ;  and  on  the  other  hand, 

These  considerations  are  well  ex-  if  it  refuses  the  motion,  it  leaves 

pressed  by  Lord  Langdale,  Master  the  defendant  at  liberty  to  go  on 

ot  the  Rolls,  in  the  latter  case,  p.  with  the  partnership  business,  at 

500,  as  follows:    "It  must  be  ad-  the  risk,  and  probably  at  the  great 

mitted  that  when  an  application  is  loss  and  prejudice,  of  the  dissenting 

made  for  a  receiver  in  partnership  party.     Between  these  difficulties, 

cases,  the  court  is  always  placed  in  it  is  not    very  easy  to    select  the 

a  position  of  very  great  difficulty,  course  which  is  best  to  be  taken, 

On  the  one  hand,  if  it  grants  the  but  the  court  is  under  the  necessity 


430  RECEIVERS.  [CHAP.  XIII. 

extreme  caution  in  exercising  their  power  of  appointing  re- 
ceivers in  this  class  of  cases,  the  jurisdiction  is  regarded  as 
an  extremely  beneficial  one,  since  cases  frequently  arise  of 
disputes  in  the  settlement  of  partnership  affairs,  where  the 
interests  of  both  parties  can  only  be  properly  secured  by 
the  intervention  of  equity  through  the  appointment  of  a 
receiver.1 

§  474.  It  may  be  said,  generally,  that  substantially  the 
same  conditions  are  requisite  to  warrant  the  extraordinary 
aid  of  equity  by  appointing  a  receiver  in  partnership  cases, 
as  are  necessary  to  induce  the  court  to  interfere  by  injunc- 
tion. Some  actual  abuse  of  the  partnership  property,  or  of 
the  rights  of  a  copartner,  must  appear,  and  not  a  mere 
temptation  to  such  abuse,  and  the  grounds  relied  upon 
should  usually  be  such  as  to  authorize  a  decree  for  a  disso- 
lution of  the  firm.  When  the  dissolution  has  already  taken 
place,  or  when  it  is  apparent  that  it  will  be  decreed  upon 
the  ground  of  some  breach  of  duty  by  one  of  the  partners, 
a  receiver  may  be  appointed,  but  the  court  will  not  interfere 
merely  because  of  a  quarrel  between  the  partners,  since  this 
does  not,  of  itself,  constitute  sufficient  ground  for  a  dissolu- 
tion.2 

of  adopting  some  mode  of  proceed-  of  their  connections,  can  not  agree 
ing  to  protect,  according  to  the  best  upon  the  adjustment,  and  the  prop- 
view  it  can  take  of  the  matter,  the  erty  or  funds  in  dispute  are  in  the 
interests  of  both  parties,  and  it  has  hands  of  one  partner  alone,  each 
accordingly  interfered  in  many  having  an  equal  right  to  the  con- 
such  cases."  trol  of  the  property,  cases  must 
1  See  Speights  v.  Peters,  9  Gill,  472.  necessarily  arise  where  the  interest 
Frick,  J.,  very  forcibly  observes,  of  both  can  only  be  properly  se- 
with  reference  to  the  power  of  ap-  cured  by  the  intervention  and  ap- 
pointing receivers,  as  follows,  p.  pointment  of  a  receiver." 
476:  "  It  is  a  high  power,  never  ex-  -Henn  v.  Walsh,  2  Edw.  Ch., 
ercised  where  it  is  likely  to  produce  129.  The  principles  governing  the 
irreparable  injustice  or  injury  to  courts  in  the  appointment  of  re- 
private  rights,  or  where  there  exists  ceivers  in  partnership  cases  are 
any  other  safe  or  expedient  remedy,  well  stated  by  McCoun,  Vice-Chan- 
"While  in  a  variety  of  instances,  es-  cellor,  in  this  case,  as  follows,  p. 
pecially  in  partnership  transactions,  130:  "  A  partnership  agreement, 
where  the  parties,  after  dissolution  like  any  other,  is  binding  upon  the 


CHAP.  XIII.] 


PARTNERSHIPS. 


431 


§  475.  Upon  applications  for  receivers  of  partnership 
assets,  in  actions  for  a  dissolution  and  a  settlement  of  the 
affairs  of  the  firm,  the  court  does  not  determine  the  ultimate 


parties,  and  they  must  adhere  to 
its  terms.     Neither  partner  is   at 
liberty  to  recede  from  it  against 
the  will  of  the  other  without  a  suf- 
ficient cause.     Mere  dissatisfaction 
by  one  partner  will  not  justify  him 
in  filing  a  bill  for  a  dissolution, 
where,  by  their  express  agreement, 
it  is  to  continue  for  a  definite  term ; 
and  this  court  will  not  interfere  to 
dissolve  the    contract  upon    such 
ground.     Here,  there  was  a  five- 
years  partnership,  with  the  privi- 
lege of  dissolving  it  at  the  end  of 
two  years.     The  complainant  has 
become  dissatisfied ;  and  he  makes 
various  charges  in  his  bill,  showing 
prima  facie  cause  enough  for  a  dis- 
solution before  the  stipulated  time. 
But  his  allegations  are  positively 
and  fully  denied   in  the  answer. 
As  the  matter  now  stands,  the  com- 
plainant's case  fails,  and  he  would 
not  be  entitled,  on  the  hearing,  to 
a  decree  for  a  dissolution  —  conse- 
quently,  not  to   an  injunction   or 
receiver  in  the  meantime.    If  there 
be    any  breach    of    covenants  by 
one  partner  which,   in  its  conse- 
quences, would  be  so  important  as 
to  authorize  the  party  complaining 
to  call  for  a  dissolution  before  the 
copartnership    could  be    dissolved 
by  the  efflux  of  time,   the    com- 
plainant   may  then    have    an  in- 
junction.     There    must    be    some 
actual    abuse   of    the    partnership 
property  or  of  the  rights  of  a  co- 
partner, and  not  a  mere  temptation 
to  such  abuse,  which  will  induce 
this  court  to  interfere.     The  same 
rules  apply  in  respect  to  the  ap- 


pointment of  a  receiver.     It  must 
appear  to  be  such  a  case  as  would 
authorize  a  decree  for  dissolution. 
In  thus  interposing,  the  court  gen- 
erally looks  to  the  winding  up  of 
the  affairs,  and  not  to  the  continu- 
ation of  a  trade  under  its  author- 
ity.   Where     a     dissolution     has 
already  taken  place,  or  it  is  appar- 
ent that  it  will  be  decreed  on  the 
ground  of  some  breach  of  duty  or 
contract  by  one    of  the  partners, 
there  a  receiver  will  be  appointed. 
But  if  partners  quarrel,  a  receiver 
will  not  be  appointed  merely  on 
such  an  account,  because  it  may 
not,    of    itself,    be     a     sufficient 
ground  for  severing  the  connection 
between  them.  In  the  present  case, 
the  complainant  produces  affidavits 
to  show  a  breach  of  the  articles  of 
the  partnership  by  the  defendant's 
withdrawing  more  than  the  stipu- 
lated    twenty-five      dollars      per 
month.     The  affidavits  are  not  pos- 
itive on  the  subject.     They  speak 
merely  from  what  appears  by  en- 
tries in  the  books,   coupled   with 
what  is    believed;    while    on    th<> 
other  hand,  the  denials  of  the  de- 
fendant are  positive.     I  can  not  at 
present,  in  the  face  of  all  this,  in- 
terfere.    It  may  be  an  unfortunate 
connection  which  the  complainant 
has  formed.    Still,  he  entered  into 
it  advisedly ;  and  he  must  endure 
it  until  the  contract  allows  of  a 
withdrawal,   unless    he  can  over- 
throw the  denials  of  the  defendant 
by  superior  evidence.     The  injunc- 
tion must  be    dissolved,    and   the 
motion  for  a  receiver  denied." 


432  KECEIVEES.  [chap.  XIII. 

rights  of  the  parties,  and  will  refuse  to  pass  upon  those 
rights  upon  such  preliminary  applications.  The  duty  of  the 
court,  in  such  cases,  is  merely  to  protect  the  property pendente 
lite,  for  the  benefit  of  whoever  may  ultimately  be  determined 
to  be  entitled  thereto,  when  the  court  shall  have  before  it 
all  the  evidence  necessary  to  a  full  and  complete  determina- 
tion of  the  questions  involved.  And  the  court  does  not,  on 
the  preliminary  application,  pretend  or  assume  to  say  which 
of  the  partners  is  entitled  to  the  firm  assets.1  But  when  the 
case  is  ready  for  final  hearing  upon  the  pleadings  and 
proofs,  it  is  error  to  appoint  a  receiver  over  a  partnership 
without  first  adjudicating  the  merits  upon  which  the  right 
to  such  relief  depends,  and  without  any  showing  of  urgency 
or  of  an  immediate  necessity  for  the  appointment.2 

§  476.  It  is  important  to  observe,  that,  as  regards  the 
parties  themselves,  a  court  of  equity  will  not  lend  its  extraor- 
dinary aid  by  appointing  a  receiver  unless  an  actual  part- 
nership inter  se  be  shown  to  have  existed ;  and  it  is,  therefore, 
in  all  cases,  essential  to  the  exercise  of  the  jurisdiction,  that 
there  should  actually  be  an  existing  partnership,  either  ad- 
mitted by  defendant  or  established  by  satisfactory  proof, 
since  otherwise  the  individual  property  of  a  defendant  might 
be  taken  from  him  by  a  receiver,  and  in  the  end  it  might 
appear  that  plaintiff  had  no  right.3  Where,  therefore,  the 
existence  of  a  partnership  is  directly  in  dispute,  and  is  de- 
nied by  defendant,  in  an  action  for  an  accounting,  the  court 
will  not  appoint  a  receiver  in  limine,  especially  where  there 
is  no  allegation  of  defendant's  insolveney,  or  of  his  inability 
to  respond  in  the  event  of  a  final  recovery  against  him.4 
And  where  the  partnership  is  only  a  nominal  one,  the  par- 
ties using  a  firm  name,  but  under  an  agreement  that  one 
shall  be  employed  as  a  clerk  or  employee  of  the  other,  re- 

"Blakeney  v.  Dufaur,  15  Bear.,  v.   Colt,  3  Halst.   Ch.,   539.     See, 

40.  also,  Hobart  v.  Ballard,  31   Iowa, 

-  Morey  v.  Grant,  48  Mich.,  326.  531 ;  Popper  if.  Scheider,  7  Ab.  Pr., 

s  Goulding  v.  Bain,  4  Sandf.,  TIG :  N.  S.,  56. 
KeiT  v.  Potter,  6  Gill,  404 ;  Nutting        «  Goulding  v.  Bain,  4  Sandf.,  716. 


CHAP.  XIII.]  PARTNERSHIPS.  433 

ceiving  as  compensation  a  share  of  the  profits,  either  with 
or  without  additional  salary,  the  agreement  expressly  stat- 
ing that  they  are  not  partners,  and  that  no  partnership  re- 
lation was  intended  to  be  formed,  the  person  thus  employed 
can  not  maintain  a  bill  against  the  other  for  an  injunction 
and  a  receiver,  since  he  has  no  such  lien  upon  the  assets  as 
to  warrant  the  interposition  of  a  court  of  equity  in  his  be- 
half.1 And  this  is  true,  even  though  the  parties  by  their 
conduct  have  become  liable  as  partners  to  third  persons,  the 
rights  of  third  persons  or  of  creditors  not  being  involved  in 
the  litigation.2 

§  477.  In  the  application  of  the  general  rule  which  lim- 
its the  relief  to  cases  of  existing  partnership  between  the 
parties,  it  must  satisfactorily  appear  that  the  partnership 
was  actually  completed  so  far  as  to  entitle  the  parties  to  a 
participation  in  profits;  since  the  right  to  participate  in  the 
profits,  and  the  danger  which  one  partner  might  sustain  by 
being  excluded  therefrom,  pending  an  action  for  a  dissolu- 
tion, constitute  the  principal  reason  for  the  appointment  of 
receivers  in  this  class  of  actions.    And  the  burden  of  showing 

o 

the  existence  of  a  partnership  at  the  time  of  the  application 
for  a  receiver  rests  upon  the  plaintiff.  Where,  therefore, 
the  consummation  of  the  relation  to  the  extent  of  a  ri^ht 
to  participate  in  the  profits  is  not  shown,  there  being  only 
a  contract  Avhich  might  ripen  into  a  partnership  upon  pay- 
ment of  certain  money,  being  in  the  nature  of  an  executory 
agreement  to  form  a  partnership,  a  receiver  should  not  be 
allowed.3 

§  478.  Where  plaintiff,  in  an  action  for  the  dissolution  of 
a  partnership,  has  obtained  an  injunction  and  a  receiver,  but 
the  partnership  relation  is  denied  by  defendants,  and  it  is 
apparent  that  plaintiff's  interest  in  the  firm,  if  any,  is  very 
small,  and  that  by  continuing  the  receiver  the  business  will 
be  greatly  imperiled  and  perhaps  ruined,  it  is  proper  for  the 
court  to  modify  the  order  for  the  injunction  and  receiver 

•  Kerr  v.  Potter,  G  Gill,  404 ;  Nut-        °-  Kerr  v.  Potter,  6  Gill,  404. 
ting  v.  Colt,  3  Halst.  Ch.,  539.  sjlobart  V.  Ballard,  31  Iowa,  521. 

23 


434 


RECEIVERS. 


[chap.  XIII. 


by  permitting  defendants,  in  lieu  thereof,  to  give  security 
for  the  payment  to  plaintiff  of  any  sum  which  may  be  found 
due  him  upon  a  final  settlement.  In  such  a  case,  the  court, 
proceeding  upon  equitable  principles,  will  mold  and  adapt 
its  remedy  so  as  to  attain  substantial  justice,  without  compro- 
mising the  rights  of  any  of  the  parties.1 

§  479.  While  it  is  true,  as  has  thus  been  shown,  that,  in 
cases  of  doubt  as  to  the  existence  of  a  partnership,  courts  of 
equity  will  not  interfere  by  a  receiver,  yet  if,  from  the  affi- 
davits presented  upon  the  application,  it  satisfactorily  ap- 
pears that  there  is  a  partnership  and  that  defendant  is  in 
possession  of  most  of  the  assets,  denying  the  other  partner 
access  thereto,  the  court  may  properly  grant  the  aid  of  a 
receiver,  although  defendant  by  affidavits  denies  the  exist- 
ence of  a  partnership.  In  other  words,  the  mere  denial  by 
the  defendant  partner  of  the  existence  of  a  partnership  is 


1  Popper  v.  Scheie! er,  7  Ab.  Pr., 
N.  S.,  56.  McCunn,  J.,  says,  p.  58: 
"  .  .  This  action  is  in  the  nature 
of  a  suit  in  equity,  in  which  the  re- 
lief demanded  is  the  dissolution  of 
an  alleged  copartnership,  and  an 
adjustment  of  the  partnership  ac- 
counts, and  in  which  provisional 
relief  is  sought  by  an  injunction 
and  the  appointment  of  a  receiver. 
I  allowed  an  interlocutory  order  for 
an  injunction  and  the  appointment 
of  a  receiver.  The  motion  now  is 
to  modify  the  order  of  injunction 
and  appointing  a  receiver;  and,  in- 
stead, to  permit  the  defendants  to 
file  security  to  pay  the  plaintiff  any 
sum  that  may  be  found  due  him  on 
a  final  settlement  of  the  partner- 
ship accounts.  In  view  of  the  facts 
that  a  partnership  between  the 
plaintiff  and  defendants  is  posi- 
tively denied;  that  a  very  small 
proportion  of  the  partnership  cap- 
ital was  contributed  by  the  plaint- 
iff, if,  indeed,  any  were  contributed 


by  him  in  the  character  of  partner ; 
that  by  the  allowance  of  an  injunc- 
tion and  the  appointment  of  a  re- 
ceiver the  partnership  business, 
which  is  very  large  and  flourishing, 
will  be  arrested,  and  perhaps 
ruined ;  and  that  by  the  modifica- 
tion proposed,  the  plaintiff  will  be 
abundantly  secured  in  all  his  rights, 
absolute  or  contingent,  I  can  not 
doubt  but  the  equity  of  the  case 
requires  a  rescission  of  the  order  of 
injunction  and  receivership,  and 
the  substitution  of  an  order  to  the 
effect  suggested.  It  is  thus  that 
a  court  of  equity  molds  and  adapts 
the  remedial  relief  it  accords,  so  as 
to  reach  the  ends  of  substantial 
justice,  without  compromising  the 
rights  or  interest  of  any  party  to 
the  litigation.  A  provisional  rem- 
edy is  only  auxiliary  to  ultimate 
relief,  and  should  never  usurp  or 
anticipate  the  office  and  effects  of 
a  trial  on  the  merits." 


CHAT.  XIII.] 


rAKTXERSIIIPS. 


435 


not  sufficient  to  prevent  the  appointment,  when  the  court  is 
satisfied  from  the  evidence  in  support  of  the  application 
that  the  partnership  relation  exists.1 

§  480.  It  is  important  to  bear  in  mind,  in  considering  the 
subject  of  receivers  in  partnership  cases,  that  it  is  not  the 
province  of  a  court  of  equity  to  conduct  the  business  of  a 
copartnership,  and  while  a  receiver  may  be  directed  to  con- 
tinue the  business  a  sufficient  length  of  time  to  enable  the 
court  to  determine  the  rights  of  the  parties  litigant,  it  is  not 
the  province  of  the  court  to  become  the  superintendent  and 
manager  of  the  private  business  of  parties.2  Indeed,  this 
necessarily  follows  from  the  very  object  and  purpose  con- 


1  Hottenstein  v.  Conrad,  9  Kan., 
435.  Brewer,  J.,  says,  p.  440:  "It 
would  be  opening  the  door  to  a 
great  deal  of  wrong  to  hold  that 
by  simply  denying  the  existence  of 
a  partnership,  a  party  in  possession 
of  large  amounts  of  partnership 
property  could  hold  that  possession 
until,  after  the  delay  of  a  suit,  the 
verdict  of  a  jury  had  established 
the  partnership.  It  would  often 
result  in  real  victory  to  the  wrong- 
doer. A  court  having  the  right  to 
hear  testimony  as  to  a  fact,  upon  a 
motion,  has  a  right  to  find  the  ex- 
istence of  that  fact.  Wherever  an 
application  for  a  receiver  in  a  part- 
nership case  is  made,  the  court  has 
to  hear  some  testimony  as  to  the 
existence  of  the  partnership.  Or- 
dinarily, there  is  on  this  point  no 
counter  testimony;  yet  the  court 
finds  on  the  testimony  presented 
on  the  motion  that  there  was  a 
partnership.  Without  such  find- 
ing, it  could  not  appoint  a  receiver. 
Having  power  to  make  such  a  find- 
ing, that  power  is  not  taken  away 
by  the  introduction  of  counter  tes- 
timony. It  must  still  find  as  to 
the  fact.    If  there  be  much  contra- 


diction in  the  testimony,  it  may 
require  proof  of  additional  facts, 
such  as  the  insolvency  of  the  de- 
fendant, before  making  any  ap- 
pointment. But  still,  its  power  to 
examine  the  testimony,  and  de- 
termine as  to  the  fact,  remains. 
Whatever  a  court  may  examine 
into  on  motion,  it  may  also  de- 
termine. Its  determination,  for 
the  purposes  of  the  motion,  estab- 
lishes the  fact." 

2  Allen  v.  Hawley,  6  Fla,,  164; 
Wolbert  v.  Harris,  3  Halst.  Cn., 
605.  See,  also,  Marten  v.  Van 
Schaick,  4  Paige,  479 ;  Jackson  v. 
De  Forest,  14  How.  Pr.,  81.  In 
Allen  v.  Hawley,  6  Fla,,  164,  Sir. 
Justice  Dupont  observes:  "As  it 
is  not  the  province  of  the  court  to 
create  a  copartnership,  so  it  is 
equally  foreign  from  its  functions 
to  conduct  its  business.  It  never 
could  have  been  contemplated  that 
a  court  of  chancery  should  become 
the  superintendent  of  the  private 
affairs  of  individuals.  Its  legiti- 
mate province  is  to  adjust  the 
rights  and  settle  the  disagreements 
of  parties  growing  out  of  such 
transactions," 


43 G  KECEIVERS.  [CHAP.  XIII. 

templated  by  the  court  in  appointing  a  receiver  upon  a  bill 
for  the  dissolution  of  a  partnership,  such  purpose  being  the 
preservation  of  the  firm  property  until  the  cause  can  be  de- 
termined, the  court,  through  its  officer  the  receiver,  having 
charge  of  the  firm  assets,  not  in  behalf  of  either  party,  but 
for  the  common  benefit  of  all.1 

§  481.  While,  as  is  thus  seen,  courts  of  equity  will  not 
sanction  the  permanent  or  continued  management  of  a  part- 
nership business  in  the  hands  of  a  receiver,  he  may,  in  a 
proper  case,  be  allowed  to  continue  the  management  of  the 
business  pending  legal  proceedings  for  a  dissolution,  in  order 
that  the  good-will  may  be  preserved  to  the  ultimate  pur- 
chaser, and  its  full  value  be  realized  by  the  partners  at  a 
final  sale,  and  to  prevent  great  loss  to  the  parties.2  Thus, 
where  two  persons  are  interested  as  partners  in  a  steamboat, 
upon  a  bill  for  a  dissolution  and  an  accounting  it  is  proper 
to  appoint  a  receiver,  and  to  direct  him  to  operate  the  boat 
during  the  continuance  of  the  litigation,  and  until  the  rights 
of  the  parties  can  be  finally  determined.3  So  where  the 
partnership  property  is  of  such  a  nature  that  it  is  liable  to 
injury  by  remaining  idle,  and  it  is  for  the  obvious  benefit  of 
all  parties  that  it  should  be  employed  until  a  sale  can  be 
effected,  as  in  the  case  of  horses  and  carriages,  where  profits 
might  accrue  from  their  hire  and  the  expense  of  their  keep- 
ing is  a  serious  charge  upon  the  receiver,  the  court  may 
permit  him  to  let  and  hire  the  property  for  the  benefit  of 
the  partnership  fund,  until  a  favorable  sale  can  be  effected.4 
But  the  court  will  not  assume  the  responsibility  of  continu- 
ing the  publication  of  a  political  paper,  which  constitutes 
the  partnership  assets,  any  longer  than  is  absolutely  neces- 
sary for  the  preservation  of  the  property ;  and  until  a  sale 
can  be  effected  by  the  receiver,  the  partners  owning  the 

i  Wolbert  v.  Han-is,  3  Halst.  Ch.,  Pr.,  81;  Heatherton  v.  Hastings,  5 

605.  Hun,  459. 

2  Allen  v.   Hawley,  6  Fla.,   164;        3  Allen  v.  Hawley,  6  Fla.,  164. 
Marten  v.  Van  Schaick,  4  Paige,        4  Jackson  v.  De  Forest,  14  How, 

479 ;  Jackson  v.  De  Forest,  14  How.  Pr.,  81. 


CHAP.  XIII.]  PARTNERSHIPS.  437 

paper  may  be  allowed  to  continue  its  editorial  management, 
the  publication  being  managed  under  the  receiver's  direc- 
tion.1 

§  482.  Courts  of  equity  are  averse  to  the  dissolution  of 
partnerships  and  the  appointing  of  receivers,  when  it  is  ap- 
parent that  this  course  will  result  disastrously  to  the  inter- 
ests of  the  parties,  and  when  the  defendant  partner  protests 
against  a  dissolution.  And  it  may  be  said  generally,  that 
the  courts  will  not  lend  their  aid  by  receivers,  in  this  class 
of  cases,  except  in  cases  falling  clearly  within  the  principles 
laid  down  by  the  authorities.2  And  while  the  general  rule 
is  well  established,  that  if  upon  the  dissolution  of  a  partner- 
ship the  partners  can  not  agree  upon  the  disposition  to  be 
made  of  the  firm  assets,  and  one  of  the  partners  prevents 
or  seeks  to  exclude  the  other  from  participation  in  the  man- 
agement of  the  firm  effects,  a  receiver  will  be  appointed, 
yet  it  must  clearly  and  satisfactorily  appear  that  there  is  a 
conflict  of  interest,  and  that  one  partner  is  seeking  to  de- 
prive the  other  of  his  right  to  manage  the  business.  Where, 
therefore,  it  does  not  appear  that  the  defendant  partner, 
against  whom  a  receiver  is  sought,  has  offered  any  opposi- 
tion to  plaintiff's  participation  in  settling  the  firm  business, 
and  the  answer  denies  that  defendant  is  proceeding  against 
the  rights  or  contrary  to  the  interests  of  his  copartner,  and 
denies  that  he  has  made  any  demand  upon  plaintiff  for 
any  of  the  firm  assets,  a  receiver  will  be  refused.  The  court 
will  not,  under  such  circumstances,  in  the  absence  of  proof  of 
mismanagement  on  the  part  of  defendant,  permit  him  to  be 
be  deprived  of  all  control  over  the  settlement  of  the  business.3 

§  483.  The  general  rule  is,  that  to  warrant  a  receiver  in 
partnership  cases,  there  must  be  some  breach  of  duty  on 
the  part  of  one  of  the  partners,  or  a  violation  of  the  arti- 
cles of  copartnership.4    And  whenever,  by  reason  of  dis- 

i  Marten  v.  Van  Schaick,  4  Paige,  3  Terrell     v.    Goddard,    18    Ga., 

479.  664. 

'l  See  Page  v.  Vankirk,  1  Brews.,  *  New  v.  Wright,  44  Miss.,  202. 
290. 


438 


RECEIVERS. 


[chap,  xm. 


sensions  or  disagreements  between  partners,  the  intervention 
of  a  court  of  equity  becomes  necessary  to  effect  a  settle- 
ment and  winding  up  of  their  affairs,  a  receiver  will  be 
allowed  upon  a  bill  by  one  partner  showing  a  breach  of 
duty  or  a  violation  of  the  copartnership  agreement  by  the 
other.1  Thus,  willful  acts  of  fraud  by  the  defendant,  such 
as  the  misappropriation  of  firm  funds,  making  false  and  im- 
proper entries  upon  the  firm  books,  depriving  complainant  of 
access  to  the  books,  and  concealing  from  him  the  true  con- 
dition of  the  business,  afford  sufficient  ground  for  appoint- 
ing a  receiver.2  So  when  the  pleadings  disclose  a  serious 
and  apparently  irreconcilable  disagreement  between  the 
partners,  both  as  to  the  control  and  disposition  of  their 
effects  and  as  to  their  respective  demands  against  each 
other,  the  granting  an  injunction  and  a  receiver  is  regarded 
as  a  provident  exercise  of  the  powers  of  a  court  of  equity, 
sanctioned  alike  by  authority  and  by  the  exigencies  of  the 
case.3  It  should,  however,  clearly  appear  that  on  account 
of  the  dissensions  and  disagreements  complained  of,  serious 
injury  will  result  to  the  parties  unless  a  receiver  is  appointed, 
and  such  dissensions,  without  fault  of  defendant,  will  not 
justify  the  summary  interposition  of  a  receiver,  unless  it  is 
clearly  shown  that  the  parties  will  suffer  loss  by  continu- 
ing in  possession  of  the  property.4 

§  4S4.     The  fact  that  a  partner's  conduct  has  been  such  as 
to  destroy  the  mutual  confidence  which  ought  to  subsist  be- 


i  Allen  v.  Hawley,  6  Fla.,  164. 
311-.  Justice  Dupont  observes,  p. 
164:  "  From  the  examination 
which  we  have  made  of  the  author- 
ities on  this  subject,  we  think  the 
law  may  be  considered  as  settled, 
that  whenever  the  intervention  of  a 
court  of  equity  becomes  necessary, 
in  consequence  of  dissensions  or 
disagreements  between  the  part- 
ners, to  effect  a  settlement  and 
closing  of  the  partnership  concerns, 
upon  bill  filed  by  any  of  the  part- 


ners, showing  either  a  breach  of 
duty  on  the  part  of  the  other  part- 
ners, or  a  violation  of  the  agree- 
ment of  partnership,  a  receiver 
will  be  appointed  as  a  matter  of 
course." 

2 Barnes  v.  Jones,  91  Ind.,  161; 
Shannon  v.  Wright,  60  Md.,  520. 

3 Whitman  v.  Robinson,  21  Md., 
30. 

4Loomis  v.  McKenzie,  31  Iowa, 
423. 


CHAP.  XIII.]  PARTNERSHIPS.  439 

tween  partners,  is  an  important  element  influencing  the 
court  in  granting  relief  by  an  injunction  and  a  receiver.1 
And  when  one  of  two  partners  has  exclusive  control  of 
the  firm  business,  and  so  mismanages  it  that  the  firm  speed- 
ily becomes  insolvent,  and  all  friendship  and  confidence 
between  the  partners  are  destroyed,  the  appointment  of  a 
receiver  may  be  regarded  as  the  only  practicable  method  of 
speedily  and  peaceably  winding  up  the  affairs  of  the  firm. 
The  relief  will  be  granted,  in  such  a  case,  even  though  the 
plaintiff  in  the  bill  may  have  acted  in  an  unwarranted  and 
illegal  manner,  in  himself  attempting  to  exclude  defendant 
from  possession  and  control  of  the  assets  after  filing  his 
bill.2  So  when  it  is  apparent  from  the  bill  and  answer  that 
neither  partner  has  confidence  in  the  other,  and  it  is  ad- 
mitted by  both  that  the  firm,  is  in  a  condition  of  insolvency, 
and  each  partner  charges  the  other  with  intent  to  waste  the 
joint  property  and  to  give  an  undue  preference  to  certain 
creditors,  it  is  peculiarly  fitting  and  proper  that  a  receiver 
should  be  appointed,  as  a  means  of  winding  up  the  firm 
business  for  the  benefit  of  all  concerned.  Under  such  cir- 
cumstances, the  relief  is  granted  primarily  for  the  benefit 
of  the  firm  creditors,  that  they  may  come  in  pari  passu  and 
share  in  the  proceeds  according  as  their  respective  priorities 
may  be  shown.3 

§  485.  It  is  to  be  observed,  however,  that  the  mere  want 
of  co-operation  by  one  partner  in  managing  the  business, 
thus  leading  the  other  to  act  upon  his  own  responsibility,  is 
not  sufficient  ground  for  the  interference  of  equity  by  a 
receiver,  when  the  defendant  has  not  interfered  with  the 
management  of  the  business  by  the  plaintiff.  And  when 
one  member  of  the  firm  occupies  the  relation  of  managing 

1  Smith  v.  Jeyes,  4  Beav.,  503;  2Boyce  v.  Burchard,  21  Ga.,  74. 
Todd  v.  Rich,  2  Tenn.  Ch.,  107.  See,  » Williamson  v.  Wilson,  1  Bland, 
also,  Boyce  v.  Burchard,  21  Ga.,  74;  418.  And  see  this  case  for  an  ex- 
Williamson  v.  Wilson,  1  Bland,  tended  discussion  of  the  principles 
418;  Sutro  v.  Wagner,  8  C.  E.  governing  courts  of  equity  in 
Green,  388 ;  White  v.  Colfax,  33  N.  granting  receivers  in  partnership 
Y-  Supr.  Ct.  R.,  297.  cases. 


4iO  RECEIVERS.  [CHAP.  XIII. 

partner,  having  practically  the  sole  management  and  con- 
trol of  the  business,  the  mere  fact  that  the  other  refuses  to 
co-operate  with  him  affords  no  sufficient  ground  for  a  re- 
ceiver.1 Nor  does  the  fact  that  the  partnership  business  has 
been  unprofitable,  or  that  it  should  be  discontinued  and  the 
firm  dissolved,  warrant  a  court  in  taking  the  property  out 
of  defendant's  hands,  to  be  administered  by  a  receiver.2 

§  4S6.  The  appointment  of  a  receiver,  upon  a  bill  for  an 
account  of  partnership  affairs,  is  not  a  matter  of  course, 
since  the  granting  of  such  applications  as  of  course  would 
frequently  work  great  hardship  and  injustice.  And  when 
no  disqualification  is  shown  on  the  part  of  the  defendant 
partner,  the  bill  alleging  no  facts  showing  a  necessity  for  a 
receiver,  and  merely  alleging  in  general  terms  that  plaintiff 
is  on  principles  of  equity  entitled  to  the  interposition  of  the 
court  and  the  aid  of  a  receiver,  the  court  will  refuse  to  in- 
terfere, the  confidence  reposed  by  one  partner  in  another 
being  a  sufficient  objection  to  the  appointment  of  a  receiver 
under  such  circumstances.3 

§  487.  Where  the  conduct  of  the  defendant  partner  has 
been  such  as  to  satisfy  the  court  that  he  has  deliberately  re- 
solved to  break  up  and  ruin  the  firm  business,  and  the  per- 
sonal relations  between  the  partners  are  such  that  they  can 
never  carry  on  the  business  advantageously,  a  fit  case  is  pre- 
sented for  an  injunction  and  a  receiver.4 

§  488.  Although  there  may  be  some  dispute  as  to  whether 
property  in  possession  of  the  defendant  partner,  in  an  action 
for  an  account  between  partners,  is  really  firm  property, 
yet  when  it  appears  that  it  was  received  in  part  payment 
for  a  sale  of  firm  property,  and  plaintiff  shows  that  defend- 
ant is  insolvent,  and  that  he  has  acted  in  bad  faith  and  has 
disposed  of  part  of  the  property  with  intent  to  defraud 
creditors,  sufficient  cause  is  shown  for  an  injunction  and  a 

i  Roberts  v.  Eberhardt,  Kay,  148.  3  Opinion  of  Gould,  J.,  in  Tom- 

2  Moies  v.  O'Neill,  8  C.  E.  Green,  linson  v.  "Ward,  2  Conn.,  396. 

207 ;  Shoemaker  v.  Smith,  74  Ind.,  4  Sutro  v.  "Wagner,  8  C.  E.  Green, 

71.  388. 


CH.VP.  XIII.]  PAETNERSUIPS.  44:1 

receiver,  leaving  defendant  to  show  if  lie  can,  in  the  further 
stages  of  the  cause,  that  the  property  in  question  was  his 
individual  property.1 

§  489.  Where,  upon  the  dissolution  of  a  partnership,  the 
members  enter  into  an  agreement  fixing  the  terms  of  dis- 
solution, and  the  retiring  partner  transfers  the  entire  part- 
nership property  to  the  remaining  partners,  retaining  only 
an  equity  to  compel  them  to  pay  the  firm  liabilities,  the 
courts  will  be  exceedingly  jealous  in  guarding  the  retiring 
partner's  rights,  and  in  enforcing  performance  of  their 
agreement  by  the  other  partners.  And  if  they  violate  and 
depart  from  the  terms  of  such  agreement  in  important  par- 
ticulars, and  deny  the  retiring  partner's  right  to  have  access 
to  the  books,  to  which  he  is  entitled  under  the  terms  of  the 
dissolution,  sufficient  cause  is  shown  for  a  receiver  to  wind 
up  the  partnership  affairs.  And  the  fact  that  such  an  em- 
bittered state  of  feeling  exists  between  partners,  with  refer- 
ence to  the  winding  up  of  their  affairs,  as  to  render  it 
manifest  that  the  right  of  supervision  by  one  partner  can  not 
be  exercised  without  great  unpleasantness,  is  an  additional 
ground  for  granting  relief  by  a  receiver.2  But  when  the 
partners,  upon  a  dissolution  of  the  firm,  enter  into  an  agree- 
ment as  to  the  method  of  collecting  and  disposing  of  their 
outstanding  accounts  and  of  closing  up  the  firm  business,  a 
receiver  should  not  be  appointed  when  defendants  are 
responsible,  and  when  no  danger  is  shown  as  likely  to  re- 
sult from  awaiting  the  final  disposition  of  the  case  upon  its 
merits.3 

§  490.  As  between  the  partners  themselves,  a  receiver  is 
appointed  only  for  the  protection  of  the  party  complaining 
against  the  adverse  possession  of  the  other  partner.  There 
is,  therefore,  no  ground  for  a  receiver  upon  the  application 
of  a  partner  who  is  himself  in  possession,  since  he  is  fully 
authorized  to  sell  the  firm  assets,  subject  to  his  liability  to 

1  Saylor  v.  Mockbie,  9  Iowa,  209.        3 Simon    v.    Schloss,    4S    Mich., 
-  White  v.  Colfax,  33  N.  Y.  Supr.    233. 
Ct.  R.,  297. 


442  RECEIVERS.  [CHAP.  XIII. 

account  to  the  other  partner  for  his  share.  And  if  the  de- 
fendant partner  does  not  object  to  the  control  of  the  prop- 
erty by  plaintiff,  the  latter,  being  in  possession,  will  not  be 
allowed  a  receiver.1 

§  491.  Upon  application  for  the  extraordinary  aid  of 
equity  by  a  receiver  in  cases  of  partnership,  the  relief  will 
usually  be  denied  when  the  equities  of  plaintiff's  case  are 
fully  met  and  negatived  by  defendant's  answer.2  Thus,  in 
an  action  for  an  account  of  the  firm  affairs  and  for  a  re- 
ceiver of  its  assets,  when  the  defendant  partner  denies  by 
his  answer  the  principal  allegations  of  the  bill,  and  denies 
that  he  has  excluded  plaintiff  from  participating  in  the  busi- 
ness, or  from  having  access  to  the  books,  and  also  denies 
that  he  has  refused  to  account  with  the  plaintiff  concerning 
the  firm  business,  a  receiver  will  not  be  allowed.3  So  when 
the  allegations  of  the  bill  are  so  general  in  their  nature  that 
an  indictment  for  perjury  could  not  be  founded  upon  them 
if  false,  and  the  equities  of  plaintiff's  case  are  fully  denied 
by  the  answer,  defendant  denying  that  he  has  been  guilty 
of  any  waste  or  improper  expenditure  or  misappropriation 
of  the  partnership  fund  as  charged  in  the  bill,  although 
plaintiff  may  be  entitled  to  an  accounting,  no  sufficient 
ground  is  presented  to  justify  withdrawing  the  property 
from  the  hands  of  a  defendant  partner  who  is  fully  ac- 
quainted with  the  business,  and  putting  it  into  the  hands  of  a 
receiver.4  And  if  the  equities  of  the  bill  are  all  successfully 
met  and  contradicted  by  the  answer,  it  is  proper  for  the 
court  to  dissolve  a  preliminary  injunction  granted  upon 
filing  the  bill,  and  to  refuse  the  appointment  of  a  receiver.5 

§  492.  As  between  partners  themselves,  a  receiver  will 
not  be  appointed  to  take  possession  of  property  which  the 


1  Smith  v.  Lowe,  1  Edw.  Ch.,  33.  3  Parkliurst  v.  Muir,  3  Halst.  Ch., 

2 Parkhurst  v.  Muir,  3  Halst.  Ch.,  307. 

307;  "Williamsons.  Monroe,  3  Cal.,  4 Williamson  v.  Monroe,  3  Cal., 

383 ;  Coddrington  v.  Tappan,  26  N.  383. 

J.  Eq.,  141.     See,  also,  Rhodes  v.  5 Rhodes  v.  Lee,  32  Ga.,  470. 
Lee,  32  Ga.,  470. 


CHAP.  XIII.]  PARTNERSHIPS.  443 

plaintiff  partner  claims  to  belong  to  himself,  as  his  individ- 
ual property,  transferred  to  him  by  the  firm,  and  when  it  is 
not  alleged  that  his  right  as  individual  owner  of  the  prop- 
erty is  questioned,  or  his  possession  disturbed.1 

§  493.  Where,  upon  the  dissolution  of  a  partnership,  the 
outgoing  partner  assigns  his  entire  interest  in  the  firm  assets 
to  the  remaining  partner,  upon  condition  of  the  latter  as- 
suming all  the  debts  of  the  firm,  and  agreeing  to  save  the 
retiring  partner  harmless  on  account  thereof,  the  relation 
thus  established  between  the  parties  is  analogous  to  that  of 
principal  and  surety,  the  continuing  partner  having  the  clear 
legal  title  to  the  property,  and  there  being  no  joint  owner- 
ship. And  while  a  receiver  is  not  ordinarily  allowed  as 
against  a  clear  legal  title,  when  there  is  no  hen  or  acknowl- 
edged trust,  yet  upon  a  bill  by  the  surety  or  outgoing  part- 
ner, showing  that  the  continuing  partner  is  fraudulently 
acting  in  disregard  of  his  covenants,  and  sending  his  money 
beyond  the  state,  and  that  plaintiff  is  being  sued  for  the 
firm  debts,  a  receiver  may  be  appointed  to  take  charge  of 
such  an  amount  of  the  firm  assets  as  will  suffice  to  discharge 
the  joint  indebtedness  and  relieve  the  surety.2 

§  494.  When,  upon  the  dissolution  of  a  partnership,  one 
partner  assumes  payment  of  all  the  firm  indebtedness,  and 
a  creditor's  bill  is  afterward  filed  upon  a  judgment  against 
the  firm,  on  which  a  receiver  is  sought,  the  application  for 
a  receiver  should  not  be  confined  merely  to  the  individual 
property  of  the  partner  as  to  whom  the  firm  indebtedness 
has  been  assumed  by  his  copartner,  but  should  extend  to 
and  cover  the  partnership  effects,  as  well  as  the  separate 
property  of  the  defendant  who  is  the  real  debtor.3 

§  495.  Upon  a  bill  for  an  accounting  between  partners, 
and  for  a  settlement  of  their  affairs  after  a  dissolution,  the 
appointment  of  a  receiver  has  the  effect  of  preventing  one 
partner  from  giving  a  preference  to  any  creditor  by  a  war- 
rant of  attorney  to  confess  judgment  for  a  firm  indebted- 
Buchanan  v.  Coinstock,  57  2  West  v.  Chasten,  12  Fla.,  315. 
Barb.,  579.  3  Henry  v.  Henry,  10  Paige,  314. 


44i  RECEIVERS.  [CHAP.  XIII. 

ness.  And  a  creditor  thus  obtaining  judgment  acquires  no 
such,  lien  as  entitles  him  to  satisfaction  of  his  judgment  out 
of  the  fund  in  the  receiver's  hands,  in  preference  to  the 
other  partnership  creditors.1  But  the  jurisdiction  of  equity 
over  the  affairs  of  insolvent  partnerships,  by  the  appoint- 
ment of  receivers,  will  not  be  exercised  in  such  manner  as 
to  interfere  with  the  rights  of  creditors,  which  have  ripened 
into  liens  upon  the  firm  property  by  the  use  of  diligence, 
before  the  receiver's  appointment.  And  the  levy  of  an 
execution  by  a  judgment  creditor  of  the  firm,  upon  partner- 
ship property,  before  the  order  appointing  a  receiver,  will 
not  be  overreached  by  such  order,  and  the  subsequent  ap- 
pointment of  the  receiver  will  not  deprive  the  execution 
creditor  of  the  rights  acquired  by  his  levy.2  If,  however, 
a  receiver  is  already  appointed  and  is  in  possession  of  the 
firm  assets  for  the  benefit  of  all  the  creditors,  no  creditor 
will  be  permitted  to  levy  upon  and  sell  the  property  for  his 
own  benefit.3 

§  496.  The  fact  that  one  partner  fails  to  contribute  his 
portion  of  the  capital  stock  of  the  firm,  as  fixed  by  the 
articles  of  copartnership,  and  that  he  sells  his  interest  in 
the  firm  to  a  third  person,  without  the  knowledge  or  con- 
sent of  the  other  partner,  coupled  with  his  insolvency  and 
refusal  to  pay  any  portion  of  the  partnership  indebtedness, 
and  the  fact  that  the  purchaser  has  taken  possession  of  the 
firm  property  and  threatens  to  exclude  the  other  partner 
therefrom,  are  sufficient  grounds  for  granting  an  injunction 
and  a  receiver  to  take  charge  of  the  assets.4 

§  497.  It  is  not  sufficient  ground  for  appointing  a  re- 
ceiver, upon  a  bill  for  the  settlement  of  partnership  affairs, 
that  the  defendant  partner  has  large  sums  of  money  belong- 
ing to  the  firm  in  his  hands,  when  it  is  not  shown  that  there 
is  any  danger  of  the  money  being  ultimately  lost  to  the 

1  Waring  v.  Robinson,  Hoffra. ,  524.        3Knode    v.   Baldridge,    73  Ind., 

2  Van  Alstyne  v.  Cook,  25  N.  Y.,     54. 

489.  And  see  Davenport  v.  Kelly,  4  Heathcot  v.  Ravenscrof t,  2 
42  N.  Y.,  193.  Halst.  Ch.,  113. 


CHAP.  XIII.]  PARTNERSHIPS.  44:5 

plaintiffs,  and  no  allegation  is  made  that  defendant  is  in- 
solvent and  unable  to  respond  for  the  amount  due.1 

§  498.  In  an  action  between  partners,  a  receiver  will  not 
be  appointed  to  take  charge  of  and  sell  certain  shares  of 
stock  in  an  incorporated  company,  which  constitute  the  entire 
assets  of  the  firm,  when  it  is  not  determined  how  much  of 
the  stock  belongs  to  each  partner,  the  question  depending 
upon  the  state  of  their  accounts;  and  when  it  is  not  alleged 
that  the  defendant  partner  is  insolvent,  and  he  denies  by  his 
answer  the  equities  of  plaintiff's  case  and  consents  that  one- 
half  the  stock  may  be  transferred  to  plaintiff,  and  offers  to 
give  such  security  as  the  court  may  require  to  indemnify 
the  plaintiff  partner  for  any  balance  which  may  ultimately 
be  found  in  his  favor.2 

§  499.  The  fact  that,  after  the  dissolution  of  a  partnership, 
the  remaining  partners  continue  to  carry  on  the  business  on 
their  own  account,  with  the  partnership  effects,  is  sufficient 
ground  to  warrant  the  interference  of  equity  by  a  receiver.3 

§  500.  In  case  of  a  partnership  formed  for  the  purpose  of 
sawing  lumber,  where  by  the  articles  of  copartnership  the 
partner  having  charge  of  the  business  was  to  take  the  tim- 
ber used  for  the  business  from  land  belonging  to  the  other 
partner,  a  violation  of  this  part  of  the  contract  has  been  held 
a  sufficient  breach  of  duty  to  warrant  an  injunction  and  a 
receiver,  when  the  business  was  shown  to  be  in  a  declining 
condition  and  the  firm  indebtedness  increasing.4 

§  501.  When  the  appointment  of  a  receiver  of  a  partner- 
ship estate,  in  an  action  for  an  accounting  between  the 
partners,  is  dependent  upon  whether  it  was  a  partnership 
at  will  or  for  a  term  of  years,  and  if  at  will  whether  it  has 
actually  been  dissolved,  the  court  will  not  determine  the 
question  upon  a  motion  for  a  receiver,  but  may  direct  an 
issue  to  be  tried  at  law  as  to  whether  there  was  a  subsisting 

HVellman  v.  Harker,  3  Oregon,  3  Harding    v.    Glover,    18   Ves., 

520.  281. 

2  Buchanan     v.    Comstock,     57  4  New  v.  Wright,  44  Miss.,  202. 
Barb.,  568. 


446  RECEIVERS.  [CHAP.  XIII. 

partnership  between  the  parties.1  So  if,  upon  an  applica- 
tion for  a  receiver  on  a  bill  for  the  settlement  of  partner- 
ship affairs,  there  is  doubt  as  to  whether  plaintiff  is  entitled 
to  an  interest  in  the  profits,  the  court  may  direct  an  issue  to 
be  tried  by  a  jury,  as  to  whether  plaintiff  is  entitled 
to  profits,  and  if  so  in  what  amount.2 

§  502.  The  courts  are  averse  to  appointing  receivers  in 
controversies  between  partners,  without  notice  to  the  de- 
fendant partner  and  without  service  of  process,  especially 
when  an  injunction  has  already  been  granted  which  is 
ample  to  protect  the  property  from  loss  until  the  motion  for 
a  receiver  can  be  regularly  heard.3 

§  503.  As  regards  the  jurisdiction  of  equity  in  cases  of 
foreign  partnerships,  it  is  held,  in  Massachusetts,  that  a  re- 
ceiver will  not  be  appointed  against  a  non-resident  purchaser 
of  the  interest  of  one  partner,  conducting  the  business  in 
another  state,  although  it  would  seem  that  as  against  such 
partner,  if  within  the  jurisdiction  of  the  court,  a  receiver 
may  be  had.4  And  when  an  association  in  the  nature  of  a 
partnership  was  formed  in  England,  for  the  purpose  of  con- 
ducting mining  operations  in  Brazil,  and  the  property  of 
the  association  in  Brazil  was  vested  in  a  trustee  for  manage- 
ment, upon  a  bill  by  a  member  of  the  association  in  Eng- 
land, in  behalf  of  himself  and  all  others,  for  an  accounting 
and  distribution  of  profits,  the  trustee  having  clandestinely 
left  the  country  and  having  threatened  to  sell  the  property 
of  the  association,  the  court  allowed  a  receiver  and  granted 
an  injunction  to  restrain  the  trustee  from  selling,  the  relief 
being  justified  by  the  necessity  of  protecting  the  property.5 
§  504.  Where  plaintiffs,  the  owners  of  a  farm,  have  en- 
tered into  an  agreement  with  defendant  in  the  nature  of  a 
partnership,  for  working  the  farm  and  dividing  the  profits, 

i  Fairburn  v.  Pearson,  2  Mac.  &  4  Harvey  v.  Varney,  104  Mass., 

G.,  144.  436. 

2  Peacock  v.  Peacock,  16  Ves.,  49.  5  Sheppard  v.  Oxenford,  1  Kay  & 

3  McCarthy  v.   Peake,   18   How.  J.,  491. 
Pr.,  138. 


CHAP.  XIII.]  PARTNERSHIPS.  447 

with  a  provision  that  plaintiffs  may  terminate  the  partner- 
ship on  six  months  notice,  if  the  profits  shall  not  reach  a 
certain  amount,  upon  showing  that  the  profits  have  not 
reached  the  amount  agreed  upon,  plaintiffs  have  been  al- 
lowed an  injunction  and  a  receiver.1 

§  505.  With  regard  to  the  effect  of  a  receivership  in 
partnership  cases  upon  the  rights  of  creditors,  it  is  held,  in 
California,  that  the  filing  of  a  bill  by  one  partner  for  a  dis- 
solution and  an  accounting,  and  the  appointment  of  a 
receiver  thereon,  will  not  prevent  a  general  creditor  of  the 
firm  from  proceeding  by  attachment  and  judgment,  and 
thus  gaining  a  priority  over  other  creditors,  at  any  time  be- 
fore a  final  decree  dissolving  the  firm.  Until  a  dissolution 
of  the  partnership,  it  is  held,  it  can  not  be  known  that  the 
firm  is  insolvent  or  that  the  court  will  administer  its  assets, 
and  it  would,  therefore,  be  unjust  to  deny  a  creditor  not  a 
party  to  that  litigation  the  right  to  prosecute  an  action  at 
law  for  the  recovery  of  his  demand.2 

§  50G.  Where,  upon  a  bill  for  the  settlement  of  partner- 
ship affairs  and  for  a  receiver,  an  injunction  is  granted  and 
a  receiver  appointed,  if,  under  the  circumstances  of  the  case, 
the  injunction  is  regarded  as  a  proper  auxiliary  to  the  re- 
ceivership, upon  overruling  a  motion  to  rescind  the  appoint- 
ment of  the  receiver,  the  injunction  will  be  continued  until 
the  hearing  or  further  order  of  the  court.3 

§  507.  The  right  to  invoke  the  aid  of  equity  by  the  ap- 
pointment of  a  receiver  of  partnership  effects,  in  an  action 
to  wind  up  the  firm  affairs,  is  not  limited  to  the  parties 
themselves,  and  the  jurisdiction  may,  under  proper  circum- 
stances, be  exercised  in  favor  of  the  assignees  of  the  partners 
who  have  succeeded  to  their  interests  in  the  firm.  For 
example,  where  both  partners  have  assigned  and  transferred 
their  respective  interests  in  the  firm,  upon  a  bill  by  the  pur- 

1  Dunn  v.  McNaught,  38  Ga.,  179.     opinion  of  Burnett,  J.,  in  Adams  v. 

2  Adams  v.  Woods,  8  Cal.,  152;    Hackett,  7  Cal.,  187. 

Nagleet'.  Minturn,  id.,  540;  Adams  3  Williamson  v.  Wilson,  1  Bland, 
v.  Woods,   9  Cal.,   24.     And    see    428. 


us 


RECEIVERS. 


[chap,  x  n. 


chaser  or  assignee  under  one  of  the  partners  against  the 
assignees  of  the  other,  alleging  their  possession  of  the  prop- 
erty as  well  as  their  insolvency  and  refusal  to  allow  plain  till 
to  be  let  into  possession,  a  proper  case  is  presented  for  ap- 
pointing a  receiver,  upon  the  general  principles  which 
govern  the  jurisdiction  as  between  partners  themselves.1 

§  508.  In  cases  of  limited  partnerships,  the  courts  of  New 
York  allow  the  appointment  of  receivers  upon  the  insolvency 
of  the  firm,  for  the  protection  of  all  the  creditors,  and  will 
not  permit  any  creditor  to  obtain  a  preference  in  the  satis- 
faction of  his  demand.  It  is  held,  in  that  state,  that  upon 
the  insolvency  of  such  a  partnership  its  assets  immediately 
become  a  trust  fund  to  be  divided  equally  among  all  the 
creditors,  and  it  is  the  duty  of  the  general  partners  to  place 
this  fund  in  the  hands .  of  a  trustee  for  equal  distribution 
among  the  creditors.  And  when  the  general  partners  neg- 
lect the  performance  of  this  duty,  the  court  will  appoint  a 
receiver,  who  becomes  entitled  to  the  entire  assets  of  the 
firm  as  they  existed  at  the  date  of  insolvency,  and  dis- 
charged of  all  hens  suffered  or  created  by  the  partners  after 
that  elate.2 


iMaynard  v.  Railey,  2  Nev.,  313. 

2  Jackson  v.  Sheldon,  9  Ab.  Pr., 
127.  See,  also,  Lottimer  v.  Lord, 
4  E.  D.  Smith,  183.  In  Jackson  v. 
Sheldon,  9  Ab.  Pr.,  127,  the  defend- 
ants in  the  case  had  formed  a  spe- 
cial or  limited  partnership  under 
the  statute  of  New  York.  Insolv- 
ency ensurd,  and  judgments  hav- 
ing been  recovered  against  the 
partners  by  default,  under  which 
their  stock  was  levied  upon  and 
partly  sold,  they  made  an  assign- 
ment for  the  benefit  of  their  cred- 
itors. Jackson,  who  was  a  creditor 
at  large  of  the  firm,  brought  this 
action  to  set  aside  the  judgments 
and  vacate  the  sales,  and  for  the 
appointment  of  a  receiver  to  take 


the  assets  and  apply  them  for  the 
benefit  of  all  the  creditors.  The 
court,  Davies,  J.,  say,  p.  133,  after 
a  review  of  the  New  York  author- 
ities :  ' '  These  cases,  therefore,  fully 
sustain  the  proposition  that  as  soon 
as  the  special  partnership  becomes 
insolvent,  it  is  the  duty  of  the  gen- 
eral partners  to  place  the  assets  of 
the  firm  in  the  hands  of  a  compe- 
tent trustee,  to  divide  the  same 
equally  among  its  creditors.  The 
question  presented  in  this  case  is, 
whether,  having  neglected  that 
duty,  the  court  will  permit  them, 
by  reason  of  such  omission,  to  ac- 
complish indirectly  what  they  are 
prohibited  from  doing  directly  — 
give  a  preference  among  their  cred- 


CHAP.  XIII.] 


PARTNERSHIPS. 


419 


§  508  a.  The  appointment  of  a  receiver  in  an  action  for 
the  settlement  of  partnership  affairs  being  merely  ancillary 
to  the  principal  relief  sought,  it  constitutes  no  bar  to  the 
relief  that  a  similar  motion  was  denied  in  a  former  suit 
brought  by  the  plaintiff  partner  for  a  settlement  of  the 
firm  business,  which  suit  was  dismissed  by  plaintiff  of  his 
own  motion.  Such  dismissal  being  without  prejudice  to 
plaintiff's  rights,  he  is  at  liberty  to  bring  another  action 
with  all  its  rights  and  incidents,  including  the  right  to  apply 
for  a  receiver.1 


itors.  I  think  clearly  not.  The 
moment  the  firni  became  insolvent 
their  ejects  became  trust  funds,  to 
be  divided  equally  among  all  their 
creditors.  No  one  creditor  could 
obtain  a  preference  over  another 
for  payment  out  of  this  fund,  by 
reason  of  any  act  of  omission  or 
commission  on  the  part  of  these, 
whose  duty  it  was  immediately  to 
place  the  funds  and  assets  in  the 
hands  of  a  competent  trustee.  On 
the  happening  of  insolvency,  the 
assets  of  a  limited  copartnership, 
equally  with  those  of  a  moneyed 
corporation,  have  attached  to  them 
the  character  of  trust  funds,  in 
which  all  creditors  are  entitled 
equally  to  participate,  and  in  which 
no  one  can  share  to  the  disadvan- 
tage of  the  others.  .  .  The  gen- 
eral partners  of  this  special  part- 
nership, not  having  discharged  the 
duty  which  the  law  casts  upon 
them,  on  the  happening  of  the  in- 
solvency of  the  partnership,  by 
29 


placing  the  trust  funds  in  the  hands 
of  a  competent  trustee,  for  equal 
distribution  among  all  the  credit- 
ors, it  is  entirely  competent  for  this 
plaintiff  to  invoke  the  aid  of  this 
court  to  accomplish  the  same  re- 
sult. It  is  the  duty  of  this  court 
to  appoint  a  receiver  for  that  pur- 
pose, who  will  be  entitled  to  take 
charge  of  and  possess  himself  of 
all  the  assets,  funds,  and  effects  of 
said  partnership  as  they  existed  at 
the  time  of  its  insolvency,  dis- 
charged of  all  liens  suffered  or 
created  since  the  happening  of  that 
event,  and  to  collect  in  the  same, 
and  to  distribute  the  same  equally 
among  all  the  creditors  of  the 
partnership.  The  injunction  and 
receiver  as  prayed  for  in  the  com- 
plaint should  have  been  granted, 
and  the  order  appealed  from  deny- 
ing the  same  must  be  reversed  with 
costs." 

1  Anderson  v.  Powell,  44  Iowa, 
20. 


450  RECEIVERS.  [CHAP.  XIII. 


II.  Receiver  Upon  Dissolution  of  the  Firm. 

§  509.    English  rule  denying  receiver  unless  plaintiff  is  entitled  to  a  dis- 
solution. 

510.  English  rule  followed  in  this  country ;  receiver  does  not  neces- 

sarily follow  injunction ;  disagreement  on  dissolution. 

511.  Ground  for  dissolution  not  necessarily  ground  for  receiver ;  relief 

refused  when  defendant  ha3  advanced  entire  capital ;  insolv- 
ency of  defendant. 

512.  Relief  refused  purchaser  of  one  partner's  interest  at  sheriff's  sale. 

513.  Departure  from  agreement,  when  ground  for  receiver  in  case  of 

theater. 

514.  Court  should  be  careful  to  preserve  the  business;  relief  not 

granted  when  it  would  destroy  value  of  business  without  ben- 
efit to  either  party. 

515.  Relief  granted  on  exclusion  from  firm;  refused  when  answer 

denies  bill. 

516.  Receiver  granted  against  partner  authorized  to  close  up  firm. 

517.  Assignment  of  assets  by  insolvent  partners  for  benefit  of  their 

creditors,  ground  for  relief. 

518.  General  assignment  for  benefit  of  all  creditors,  when  receiver 

refused. 

519.  Partnership  at  will,  receiver  almost  of  course;   funds  applied 

ratably,  and  without  preference. 

520.  Appointment  on  final  decree ;  failure  to  give  bond. 

521.  Usually  appointed  on  interlocutory  application ;  injunction  also 

granted. 

§  509.  It  is  the  established  doctrine  in  England,  that  a 
receiver  in  partnership  cases  can  only  be  allowed  when  the 
relief  is  ancillary  to  a  dissolution  of  the  firm.  And  when 
the  court  can  not  foresee  that  it  will  ultimately  decree  a  dis- 
solution, or  when  the  object  of  the  suit  is  not  to  obtain  a 
dissolution,  but  on  the  contrary  to  continue  the  partnership, 
the  bill  praying  the  establishment  of  the  firm  and  the  spe- 
cific performance  of  the  partnership  articles,  equity  will  not 
lend  its  extraordinary  aid  by  a  receiver.1  And  while,  under 
the  English  practice,  it  is  almost  a  matter  of  course  to 
appoint  a  receiver  upon  a  bill  for  the  dissolution  of  a  firm, 

iHall  v.  Hall,  3  Mac.  &  G.,  79;  Roberts  v.  Eberhardt,  Kay,  148. 


CHAP.  XIII.] 


PARTXEKSIIIPS. 


451 


if  the  case  presented  is  such  as  to  entitle  plaintiff  to  a  disso- 
lution, the  court  will  not  interfere  and  take  the  conduct  of 
a  partnership  into  its  own  hands,  if,  upon  the  case  as  pre- 
sented, it  is  doubtful  whether  plaintiff  is  entitled  to  a  disso- 
lution.1 The  rule  may  be  stated  in  general  terms,  that  to 
warrant  a  receiver  in  partnership  cases,  such  a  state  of  facts 
must  be  shown  by  the  party  complaining  as,  if  proven  at 
the  hearing,  will  entitle  him  to  a  dissolution.2  And  in  con- 
sidering whether  the  conduct  of  one  partner  has  been  such 
as  to  entitle  the  other  to  a  dissolution,  for  the  purpose  of 
determining  an  application  for  a  receiver,  the  court  will 
consider  not  merely  the  specific  terms  of  the  partnership 
articles,  but  also  the  duties  and  obligations  implied  in  every 
contract  of  partnership.  And  when  it  is  obvious  that  the 
conduct  of  the  defendant  partner  has  been  so  injurious  to 
the  firm,  and  so  inconsistent  with  his  duties  as  a  partner,  as 


1  Goodman  v,  Whitcorab,  1  Jac. 
&  W.,  589:  Chapman  v.  Beach,  id., 
594.  The  doctrine  is  well  stated  in 
Goodman  v.  Whitcomb,  by  Lord 
Eldon,  as  follows:  "  This  is  a  bill 
filed  for  the  purpose  of  having  a 
dissolution  of  the  partnership  de- 
clared, and  if  the  court  can  now  see 
that  that  must  be  done,  it  follows 
very  much  of  course  that  a  receiver 
must  be  appointed.  But  if  the  case 
made  stands  in  such  a  state  that 
the  court  can  not  see  whether  it 
will  be  dissolved  or  not,  it  will  not 
take  into  its  own  hands  the  conduct 
of  a  partnership  which  only  may  be 
dissolved.  It  may  be  a  question 
whether  the  court  will  not  restrain 
a  partner,  if  he  has  acted  improp- 
erly, from  doing  certain  acts  in 
future,  but  if  what  he  has  done 
does  not  give  the  other  party  a 
right  to  have  a  dissolution  of  the 
partnership,  what  right  has  the 
•court  to  appoint  a  receiver,  and 
make  itself  the  manager  of  every 


trade  in  the  kingdom?  Where 
partners  differ,  as  they  sometimes 
do,  when  they  enter  into  another 
kind  of  partnership,  they  should 
recollect  that  they  enter  into  it  for 
better  and  worse,  and  tins  court 
has  no  jurisdiction  to  make  a  sepa- 
ration between  them  because  one  is 
more  sullen  or  less  good-tempered 
than  the  other.  Another  court,  in 
the  partnership  to  which  I  have 
alluded,  can  not,  nor  can  tins  court 
in  this  kind  of  partnersliip,  inter- 
fere, unless  there  is  a  cause  of  sep- 
aration which,  in  the  one  case, 
must  amount  to  downright  cruelty, 
and  in  the  other  must  be  conduct 
amounting  to  an  entire  exclusion 
of  the  partner  from  his  interest  in 
the  partnersliip.  Whether  a  disso- 
lution may  ultimately  be  decreed  I 
will  not  say,  but  trifling  circum- 
stances of  conduct  are  not  sufficient 
to  authorize  the  court  to  award  a 
dissolution." 
2  Smith  v.  Jeyes,  4  Beav.,  503. 


452  RECEIVERS.  [CHAP.  XIII. 

to   entitle    plaintiff    to  a  dissolution,   a  receiver   will  be 
appointed.1 

§  510.  The  English  rule  as  above  stated  has  been  fol- 
lowed in  this  country,  especially  in  the  courts  of  New  York, 
where  the  doctrine  is  well  settled  that  a  receiver  will  not  be 
appointed  over  a  subsisting  partnership,  unless  it  satisfac- 
torily appears  that  plaintiff  will  ultimately  be  entitled  to 
a  decree  for  a  dissolution  and  the  winding  up  of  the  firm 
business.2  The  grounds  relied  upon  by  the  courts  in  grant- 
ing receivers  are,  the  necessity  of  winding  up  the  affairs  of 
the  firm  and  dividing  the  surplus,  and  they  do  not  interfere 
for  the  purpose  of  continuing  or  managing  the  business, 
this  being  a  responsibility  which  the  courts  will  not  usually 
assume.3  And  although  a  preliminary  injunction  has  been 
granted,  ex  parte,  upon  a  bill  by  a  partner  seeking  a  disso- 
lution of  the  firm,  it  does  not  necessarily  follow  that  a 
receiver  will  be  appointed ;  and  if  the  court  is  satisfied  that 
no  such  case  is  presented  as  to  entitle  plaintiff  to  a  final  dis- 
solution, it  will  refuse  a  receiver,  leaving  the  injunction  to 
be  dissolved  in  due  time  upon  proper  motion.4  But  when, 
upon  the  dissolution  of  a  partnership,  the  members  of  the 
firm  can  not  agree  upon  the  mode  of  adjusting  its  affairs, 
it  is  the  usual  practice  of  the  courts,  with  a  view  to  protect 
the  rights  of  all  parties  in  interest,  to  exclude  the  partners 
from  participating  in  the  adjustment  of  the  firm  business, 
and  to  appoint  a  receiver  for  that  purpose,  and  to  grant  an 
injunction  as  a  necessary  adjunct  of  the  receivership.5  So 
when  a  partnership  at  will  is  dissolved,  there  being  no  pro- 
vision in  the  articles  as  to  the  division  of  the  property  or 
as  to  the  manner  of  closing  up  the  firm  affairs,  the  partners 
being  unable  to  agree  upon  such  matters,  and  the  defendant 

1  Smith  v.  Jeyes,  4  Beav.,  503.  4Garretson  v.  Weaver,  3  Edw. 

2  Garretson  v. Weaver,  3  Edw.  Ch. ,     Ch.,  385. 

385 ;  Jackson  v.  DeForest,  14  How.        5Van    Rensselaer   v.    Emery,    9 
Pr.,  81.  How.  Pr.,  135. 

3Jacksoc  v.  DeForest,  14  How. 
Pr.,  81. 


CHAP.  XIII.]  PARTNERSHIPS.  453 

partner  claiming  the  entire  interest  in  tlie  lease  and  good- 
will, a  proper  case  is  presented  for  appointing  a  receiver.1 

§  511.  While  it  is  thus  seen  that  courts  of  equity,  both 
in  England  and  in  America,  rarely  interfere  by  a  receiver 
in  partnership  cases  unless  it  is  apparent  that  plaintiff  will 
ultimately  be  entitled  to  a  dissolution  of  the  firm,  it  is  to 
be  borne  in  mind  that  the  mere  fact  of  the  case  as  presented 
being  sufficient  to  warrant  a  decree  for  a  dissolution  does 
not  of  itself  constitute  sufficient  ground  for  a  receiver,  in 
the  absence  of  improper  conduct  or  breach  of  duty  by  the 
defendant  partner.2  And  when  a  partnership  is  dissolvable 
by  mutual  consent,  or  determinable  at  the  will  of  either 
party,  equity  will  not,  as  of  course,  assume  control  of  the 
business  by  placing  it  in  the  hands  of  a  receiver,  although 
the  party  complaining  is  entitled  to  an  immediate  dissolu- 
tion, but  a  receiver  will  be  withheld  unless  the  relief  ap- 
pears to  be  necessary  to  protect  and  preserve  the  interests 
of  the  parties.3  The  reason  for  the  doctrine  as  here  stated 
is  found  in  the  manifest  injustice  which  would  necessarily 
result  if,  in  case  of  a  partnership  determinable  at  will,  a 
court  of  chancery  would  as  of  course,  and  for  no  other 
reason  than  that  such  was  the  wish  of  one  member  of  the 
firm,  assume  control  of  the  business  and  place  it  in  the 
hands  of  a  stranger  to  the  firm.4  Especially  will  the  court 
refuse  to  interfere  by  a  receiver  when,  by  the  articles  of  co- 
partnership, the  defendant  partner  was  required  to  advance 
and  has  advanced  the  entire  capital,  the  business  being 
conducted  by  him  in  his  own  name  and  owned  by  him  indi- 
vidually, the  plaintiff's  interest  in  the  property  upon  a  dis- 

iMcElvey  V.Lewis,  76  N.  Y.,  373.  of    the  contract  of    partnership." 

2  Harding  v.  Glover,  18  Ves.,  281.  See,  also,  Cox  v.  Peters,  2  Beas. ,  39 ; 

"I    have  frequently  disavowed,"  Renton  v.  Chaplain,  1  Stockt.,  62; 

says  Lord  Eldon  in  this  case,  "  as  a  Birdsall  v.  Colie,  2  Stockt.,  63;  Wil- 

principle  of  this  court,  that  a  re-  son  v.  Fitchter,  3  Stockt.,  71. 

ceiver  is  to  be  appointed  merely  on  3  Cox  v.  Peters,  2  Beas. ,  39 ;  Bird- 

the  ground  of   a  dissolution  of  a  sail  v.  Colie,  2  Stockt.,  63. 

partnership.     There  must  be  some  4  Birdsall  v.  Colie,  2  Stockt.,  63. 

breach  of  the  duty  of  a  partner,  or 


45  i  EECEIVEES.  [CHAP.  XIII. 

solution  being-  only  a  share  of  the  profits,  and  no  suggestion 
of  defendant's  insolvency  or  irresponsibility  being  made, 
and  no  proof  of  fraud  on  his  part.1  Where,  however,  in 
addition  to  the  fact  of  a  dissolution,  or  a  right  to  dissolve 
the  firm,  the  plaintiff  partner  shows  that  the  defendant  is 
insolvent  and  that  there  is  danger  of  loss  if  the  firm  assets 
are  entrusted  to  his  charge,  sufficient  ground  is  presented, 
to  entitle  plaintiff  to  the  aid  of  a  receiver.2 

§  512.  When  the  partnership  interest  of  one  member  of 
the  firm  is  sold  at  sheriff's  sale  under  execution  against  him, 
the  purchaser  at  such  sale  stands  in  no  better  position  than 
the  partner  himself,  and  a  court  of  equity  will  not  in  behalf 
of  such  purchaser  interfere  with  the  other  partner,  by  ap- 
pointing a  receiver  to  wind  up  the  firm  business,  unless  his 
gross  misconduct  calls  for  such  interference.  Especially 
will  the  court  be  justified  in  withholding  relief,  in  such  a 
case,  Avhen  the  bill  does  not  allege  insolvency  of  the  defend- 
ant partner,  and  it  does  not  appear  that  he  is  unable  to  re- 
spond for  any  interest  to  which  the  purchaser  may  be 
entitled  on  completion  of  the  accounts,  and  when  it  is  not 
shown  that  the  purchaser  ever  called  upon  the  defendant 
for  an  accounting.3 

§  513.  While  the  aid  of  a  receiver  in  partnership  matters 
is  usually  confined  to  cases  where  the  party  aggrieved  ap- 
pears to  be  entitled  to  a  dissolution,  there  are  instances 
where  a  departure  from  the  terms  of  the  agreement  between 
the  partners  for  the  management  of  their  business  has  been 
considered  sufficient  ground  for  a  receiver,  even  though  the 

1  Cox  v.  Peters,  2  Beas. ,  39.  "The  ceiver.     A   receiver   will    be    ap- 

true  principle,"  says  Green,  Chan-  pointed     only   where    it    appears 

cellor,  p.  41,  "is  that  adopted  by  necessary  to  protect  the  interest  of 

Chancellor  Williamson,  viz.,  that  the  parties."    And  see  Renton  v. 

where  a  partnership  is  dissolved  by  Chaplain,  1  Stockt.,  62;  Birdsall  v. 

mutual  consent,  or  determined  by  Colie,  2  Stockt.,  63. 

the  will  of  either  party,  a  court  of  2  Randall    v.   Morrell,    2    C.    E. 

chancery  will  not  as  of  coui-se  as-  Green,  343. 

sume  the  control  of  the  business,  3  Renton  v.  Chaplain,  1  Stockt., 

or  place  it  in  the  hands  of  a  re-  62. 


, 


CHAP.  XIII.]  PAETNEESHIPS.  455 

case  as  presented  would  not  justify  a  dissolution  and  none 
was  sought.  Thus,  when  the  proprietors  of  a  theater  had 
executed  an  agreement  regulating  the  management  of  their 
business,  and  providing  that  the  profits  should  be  devoted 
exclusively  to  certain  purposes,  and  that  the  treasurer  should 
be  directed  so  to  apply  them,  but  by  a  subsequent  agree- 
ment the  parties,  then  entitled  under  the  original  proprie- 
tors to  seven-eighths  of  the  theater,  contracted  for  a  different 
application  of  the  profits,  and  otherwise  affected  or  varied 
the  rights  of  the  owner  of  the  remaining  one-eighth  inter- 
est, who  had  refused  to  become  a  party  to  the  new  agree- 
ment, a  receiver  was  appointed  upon  a  bill  by  the  latter  to 
enforce  a  specific  performance  of  the  covenants  contained 
in  the  original  agreement.1 

§  514.  In  the  case  of  a  valuable  partnership  business  which 
has  been  built  up  by  the  joint  labors  and  contributions  of  all 
the  partners,  upon  a  bill  for  a  dissolution  and  a  receiver,  the 
court  should  be  careful  to  preserve  the  business  itself,  if  possi- 
ble, and  to  put  all  parties  upon  a  fair  and  equal  footing  with 
regard  to  it.  And  if  it  is  apparent  that  the  appointment  of 
a  receiver  to  direct  a  sale  of  the  entire  business,  and  to 
wind  up  the  concern,  would  destroy  its  value  without  ben- 
efit to  either  party,  the  relief  will  be  denied.  And  this  is 
true,  even  though  the  dissensions  which  have  sprung  up 
between  the  partners  are  such  as  to  make  it  manifest  that 
the  business  can  not  be  carried  on  advantageously,  and 
although  the  case  presented  is  otherwise  sufficient  to  war- 
rant a  dissolution.2 

§  515.  "When  both  partners  are  desirous  of  a  dissolution 
of  the  firm,  and  the  circumstances  of  the  case,  as  disclosed 
by  bill  and  answer,  are  such  as  seem  to  require  a  dissolu- 
tion, the  bill  charging  and  the  answer  admitting  that  plaint- 
iff is  excluded  from  the  partnership  premises,  sufficient 
cause  is  presented  for  a  receiver  to  collect  the  firm  debts 


1  Const   v.   Harris,  Turn.  &  R.,        2  summer's  Appeal,  58  Pa.  St. 
496.  168. 


45G  RECEIVERS.  [CIIAP.  XIII. 

and  take  charge  of  the  assets.1  But  when  plaintiff  relies 
for  a  dissolution  and  a  receiver  upon  the  fact  that  defend- 
ant  has  drawn  from  the  business  in  excess  of  the  sum  stip- 
ulated in  the  copartnership  articles,  and  this  is  denied  by 
defendant's  answer,  which  denies  all  the  charges  of  the  bill, 
the  court  will  refuse  an  injunction  and  a  receiver.2 

§  516.  When,  upon  the  dissolution  of  a  partnership,  one 
partner  is  authorized,  by  agreement  between  the  parties,  to 
close  up  the  firm  business,  and  its  property  and  assets  are 
turned  over  to  him,  upon  his  agreeing  to  hold  the  other 
partners  harmless,  notwithstanding  his  right,  under  the  con- 
tract, to  exclusive  possession,  if  the  bill  shows  that  he  is 
wasting  or  misapplying  the  funds,  or  that  there  is  danger 
to  the  remaining  partners  from  his  insolvency  or  fraudulent 
conduct,  a  sufficient  case  is  stated  to  justify  a  receiver.3 

§  517.  In  case  of  a  partnership  dissolvable  at  the  pleas- 
ure of  either  of  the  partners,  and  which  does,  in  fact,  be- 
come dissolved  by  the  insolvency  of  certain  members  of 
the  firm,  an  attempt  by  the  insolvent  partners  to  appro- 
priate the  firm  assets  to  the  payment  of  their  private  in- 
debtedness by  an  assignment  thereof  for  the  benefit  of  their 
creditors,  is  sufficient  to  entitle  the  other  partners  to  an 
injunction  and  a  receiver.  And  in  such  case,  the  receiver- 
ship and  the  injunction  should  extend  to  and  cover  all  of 
the  firm  assets  in  the  hands  of  the  defendant  partners  and 
their  assignee,  in  order  to  prevent  their  misappropriation.4 

§  51S.  Where,  upon  the  dissolution  of  a  partnership,  the 
partners  sign  and  publish  a  notice  of  the  dissolution,  giving 
one  partner  the  exclusive  right  to  wind  up  and  settle  the 
affairs  of  the  firm,  the  fact  that  such  partner  makes  a  gen- 
eral assignment  of  all  the  firm  assets  for  the  benefit  of  all 

iWolbertr.  Harris,  3  Halst.  Ch.,  charged  on  the  coming  in  of  de- 

605.  fendant's  answer,  denying  the  equi- 

2Henn  v.   Walsh,   2  Edw.  Ch.,  ties  of  the  bill. 

129#  4  Davis  v.  Grove,  2  Rob.  (N.  Y.), 

sDrury  v.  Roberts,  2  Md.  Ch.,  134;  Same  v.  Same,  id.,  635. 
157.    But    the    receiver    was   dis- 


CHAP.  XIII.]  PARTNERSHIPS.  457 

the  firm  creditors,  equally  and  without  preference,  will  not 
of  itself  be  deemed  sufficient  cause  for  a  receiver,  when  no 
ground  is  shown  for  believing  that  the  fund  in  the  hands  of 
the  assignee  is  in  danger,  and  when  he  is  abundantly  able 
to  respond  in  damages.1 

§  519.  When  either  member  of  a  partnership  has  the 
right  to  dissolve  the  firm  at  will,  and  the  articles  make  no 
provision  for  closing  up  the  concern,  the  appointment  of  a 
receiver  on  a  bill  for  that  purpose,  in  the  event  of  a  disagree- 
ment between  the  partners  as  to  closing  up  the  firm  busi- 
ness, is  almost  a  matter  of  course.2  And  in  such  a  case,  the 
court  will  direct  the  receiver  to  apply  the  partnership  prop- 
erty and  funds  in  payment  of  all  debts  of  the  firm  ratably, 
"without  preference  to  the  favorite  creditors  of  either  partner.3 

§  520.  It  is  competent  upon  the  final  judgment,  in  an 
action  for  the  dissolution  of  a  partnership,  to  appoint  a  re- 
ceiver as  part  of  the  decree  or  judgment  of  the  court,  and 
to  direct  him  to  take  possession  of  the  partnership  property 
and  sell  the  same,  and  to  collect  the  outstanding  debts  and 
distribute  the  proceeds  among  the  partners  according  to 
their  respective  shares.  And  it  is  not  sufficient  ground  for 
reversing  such  a  judgment  or  decree,  that  the  receiver  thus 
appointed  was  not  required  to  give  bond,  it  being  regarded 
as  the  fault  of  the  defendant  in  not  asking  for  a  bond.4 

§  521.  While,  as  is  thus  seen,  the  aid  of  a  receiver  may 
be  granted  as  part  of  the  final  decree  in  the  cause,  the  relief 
is  usually  granted  upon  interlocutory  application  on  filing  a 
bill  for  a  dissolution  and  an  accounting.  And  it  is  fre- 
quently the  case  that  the  court,  as  a  necessary  adjunct  to 
the  relief  sought  by  the  bill,  will  also  grant  an  interlocu- 
tory injunction  to  restrain  defendant  from  interfering  with 
the  management  of  the  business,  pending  the  proceedings 
for  a  dissolution. 

i  Hayes  v.  Heyer,  4  Sandf.  Ch.,  3  Law  v.  Ford,  2  Paige,  310. 

485.  «Shulte   v.    Hoffman,    18    Tex., 

*  Law  v.  Ford,  2  Paige,  310 ;  Mar-  678. 
ten  v.  Van  Schaick,  4  Paige,  479. 


458  RECEIVERS.  [CHAP.  XIII. 


III.  Exclusion  from  Firm  as  Ground  for  Receiver. 

§  522.    Exclusion  from  management  of  business  strong  ground  for  re- 
lief. 

523.  Assignment  by  one  partner  and  exclusion  from  firm. 

524.  Employment  with  share  of  profits,  when  a  partnership ;  receiver 

granted  on  exclusion  from  profits. 

525.  Exclusion  and  impossibility  of  adjusting  disagreements. 

526.  Eeceiver  appointed  in  behalf  of  purchaser  of  partner's  interest. 

527.  Dissolution  by  proceedings  in  bankruptcy ;  status  of  assignees ; 

exclusion. 

528.  Partnership  in  vessel ;  exclusive  profit. 

529.  Exclusion  from  books,  and  fraudulent  conduct. 

§  522.  In  actions  for  the  dissolution  of  partnerships  and 
the  winding  np  of  their  affairs,  the  fact  that  one  partner 
has  excluded  the  other  from  participation  in  the  profits  of 
the  business,  or  from  his  share  in  its  management  and  con- 
trol, has  always  been  regarded  as  one  of  the  strongest 
grounds  for  equitable  relief  by  the  appointment  of  a  re- 
ceiver.1 And  it  was  said  by  Lord  Eldon,  that  the  most 
prominent  consideration  on  which  the  court  acts  in  appoint- 
ing a  receiver  of  a  partnership  business  is  the  circumstance 
of  one  partner  having  taken  upon  himself  the  right  to  ex- 
clude another  from  as  full  a  share  in  the  management  of 
the  firm  business  as  he  who  assumes  that  power  himself  en- 
joys.2 And  it  was  said  by  the  same  authority,  that  as,  in 
the  ordinary  course  of  trade,  if  one  partner  seeks  to  exclude 
another  from  his  due  share  in  the  business,  the  court  will 
grant  a  receiver,  so  in  the  course  of  winding  up  the  part- 
nership affairs  the  court  will,  when  necessary,  interpose  on 
the  same  principle.3 

*  See  Gowanu.  Jeffries,  2  Ashm.,  Wolbert  v.  Harris,  3  Halst.  Ch., 

296;    Wilson    v.     Greenwood,     1  605. 

Swans.,    471;    Const  v.   Harris,   1  2  See  observations  of  Lord  Eldon 

Turn.  &  P.,  525 ;  Kirby  v.  Ingersoll,  in  Const  v.  Harris,  Turn.  &  E.,  525. 

1  Doug.  (Mich.),    477;    Katsch    v.  3  Wilson  v.  Greenwood,  1  Swans., 

Schenck,  18  L.  J.,  N.  S.  Ch.,  386;  471. 


C1IAP.  XIII.]  PAETXEESHIPS.  459 

§  523.  In  illustration  of  the  general  doctrine  of  exclusion 
from  the  firm  as  ground  for  a  receiver,  it  is  held,  that  where 
one  partner,  without  the  knowledge  or  consent  of  his  copart- 
ner, assigns  and  transfers  all  the  firm  effects,  with  the  evident 
purpose  of  shutting  out  the  other  partner  from  any  partici- 
pation in  the  settlement  of  the  firm  business,  the  assignment 
having  the  effect  of  discontinuing  the  business  and  of  ex- 
cluding the  other  partner  from  examining  the  books  or  con- 
trolling the  firm  property,  a  sufficient  case  is  presented  to 
warrant  the  interposition  of  equity  by  a  receiver.  And  in 
such  case,  the  assignee  can  have  no  claim,  even  as  to  the 
interest  of  the  assigning  partner,  sufficient  to  defeat  the 
application.1 

§  524.  Where  defendant  had  entered  into  a  contract 
with  plaintiff  that  he  would  pay  him  a  given  sum  as  salary 
for  his  services  in  defendant's  business,  and  in  addition 
thereto  would  give  him  a  certain  proportion  of  the  net 
profits  of  all  new  business  obtained  through  him,  the  agree- 
ment was  regarded  as  constituting  a  partnership ;  and  de- 
fendant having  excluded  plaintiff  from  all  participation  in 
the  profits  of  the  business,  upon  a  bill  for  a  dissolution  and 
an  accounting,  a  receiver  was  allowed.  In  such  a  case, 
the  plaintiff,  being  entitled  to  a  share  in  the  profits,  has  an 
interest  in  seeing  that  the  business  out  of  which  the  profits 
arise  is  properly  disposed  of,  and,  upon  being  excluded 
therefrom,  he  is  entitled  upon  principle  to  have  a  receiver 
when  the  parties  can  not  come  to  an  amicable  adjustment 
of  their  differences.2 

§  525.  In  the  application  of  the  doctrine  of  exclusion  as 
a  ground  for  appointing  a  receiver  in  partnership  cases,  it  is 
not  absolutely  necessary  that  the  court  should  be  satisfied 
that  the  partnership  fund  is  in  peril.  And  where  the  fund 
in  dispute  is  prima  facie  the  proceeds  of  the  partnership, 
and  the  defendant  refuses  to  allow  his  copartner  to  partici- 
pate therein,  and  excludes  him  from  all  participation  in 

iKirby    v.    Ingersoll,    1    Doug.        2  Katsch  v.  Schenck,  18  L.  J. ,  N. 
(Mich.),  477.  S.  Ch.,  386. 


460  RECEIVERS.  [~CHAP.  XIII. 

the  profits,  so  that  the  rightful  ownership  of  the  fund  can 
not  be  determined  until  a  final  adjustment  of  their  affairs, 
it  is  proper  to  continue  a  receiver  in  possession.  Under 
such  circumstances,  the  inability  of  the  partners  to  come  to 
an  adjustment  of  their  interests  would  seem  to  render  it  a 
provident  exercise  of  the  powers  of  a  court  of  equity  to  con- 
tinue in  charge  of  the  property  until  it  can  finally  determine 
the  rights  of  the  parties.1 

§  526.  When  a  partner  sells  his  interest  in  the  business 
to  a  third  person,  although  such  sale  in  effect  works  a  disso- 
lution of  the  firm,  the  remaining  partner  is  not  entitled  to 
the  exclusive  use  and  possession  of  the  property,  and  if  he 
excludes  the  purchaser  from  participation  therein,  denying 
not  only  his  rights  but  the  rights  of  the  partner  from  whom 
he  purchased,  and  sets  up  an  adverse  title  to  the  property, 
sufficient  cause  is  shown  for  appointing  a  receiver.2     ■ 

§  527.  In  case  of  the  dissolution  of  a  partnership  by  pro- 
ceedings in  bankruptcy  against  one  member  of  the  firm,  the 
assignees  of  the  bankrupt  partner  become,  as  to  his  interest, 
tenants  in  common  with  the  solvent  partner.  And  in  such 
a  case,  upon  an  application  for  a  receiver  on  the  ground  of 
exclusion,  a  court  of  equity  will  proceed  upon  the  same 
principles  by  which  it  is  governed  in  all  cases  where  some 
members  of  a  firm  seek  to  exclude  others  from  that  share 
in  the  management  of  the  business  to  which  they  are  en- 
titled.3 

Speights  v.  Peters,  9  Gill,  472.  only  where  the  property  was  in 

Mr.  Justice  Frick  observes,  p.  479:  danger  of  being  materially  injured 

"  It  is  assumed  by  the  appellant  or  lost.     But  in  respect  to  a  fund 

that  the  court,  as  preliminary  to  which    is    claimed    and  is   •prima 

the    appointment    of    a    receiver,  facie  the  proceeds  of  a  partnership, 

must  also  be  further  satisfied  that  it  is  but  a  provident  exercise  of 

the  property  is  in  imminent  peril,  equity  power  to  place  the  property 

This,   however,    is    not    always    a  under  the  care  of  the  court." 

necessary  condition  of  the  action  of  -  Seibert    v.    Seibert,    1    Brews. , 

the  court.     Against  the  legal  title,  531. 

or  a  strong  presumptive  title  in  the  3  See  observations  of  Lord  Eldon 

defendant,  the  court  would  inter-  in  Wilson  v.  Greenwood,  1  Swans., 

fere  with    great   reluctance,    and  482, 483. 


CHAP.  XIII.]  PARTNERSHIPS.  461 

§  52S.  Where  there  were  several  partners  jointly  interested 
in  a  vessel,  and  the  defendant  partners  had  been  in  posses- 
sion, acting  as  ships-husbands  and  brokers,  and  had  acted  in 
fraud  of  the  plaintiffs  by  clandestinely  making  a  profit  from 
the  employment  of  the  vessel  for  their  own  exclusive  ben- 
efit, upon  a  bill  for  an  accounting,  it  was  held  a  sufficient 
case  to  warrant  the  appointment  of  a  receiver  ad  interim, 
to  take  possession  of  the  vessel's  machinery,  which  had 
been  removed  for  repairs,  and  of  which  defendants  had  pos- 
sessed themselves  to  the  exclusion  of  plaintiffs.1 

§  529.  A  receiver  will  be  appointed  upon  a  bill  by  one 
partner  for  a  settlement  of  the  partnership  affairs,  when  it 
is  alleged  that  defendant  refuses  to  make  any  settlement 
and  denies  plaintiff  access  to  the  firm  books,  and  that  he 
has  failed  to  pay  the  firm  indebtedness,  and  has  fraudulently 
appropriated  the  partnership  funds  to  his  own  use  and  di- 
minished the  firm  assets.  Such  a  case  is  regarded  as  pre- 
senting such  elements  of  fraud  and  imminent  danger,  as  to 
clearly  warrant  the  extraordinary  aid  of  the  court.2 

JBrenan  v.  Preston,  2  DeG.,  M.     See,  also,  Barnes  v.  Jones,  91  Ind., 
&G->  813-  161;  Shannon  v.  Wright,  60  Md., 

2Haight  v.   Burr,    19  Md.,   130.     520. 


462  RECEIVERS.  [CHAP.  XIII. 


IV.  Receiver  Upon  Death  of  Partner. 

§  530.     English  doctrine ;  receiver  upon  death  of  both  partners. 

531.  Death  of  one  partner  no  ground  for  relief  unless  survivor  guilty 

of  mismanagement. 

532.  Mismanagement  of  survivor ;  relief  granted  on  bill  by  adminis- 

trator of  deceased. 

533.  When  administrator  entitled  to  the  relief ;  may  himself  be  re- 

ceiver ;  the  decree. 

534.  Rights  of  the  receiver. 

535.  Legatee  of  deceased  partner,  when  entitled  to  relief. 

536.  Receiver  allowed,  notwithstanding  appointment  of  executor ;  au- 

thority to  sue. 

537.  Relief  allowed  when  answer  admits  facts  alleged  in  bill. 

§  530.  The  jurisdiction  of  equity  in  appointing  receivers 
in  partnership  cases  is  sometimes  called  into  exercise  by 
reason  of  the  death  of  one  or  both  partners.  It  was  the 
doctrine  of  the  English  Court  of  Chancery,  established  at 
an  early  date,  that  upon  the  death  of  both  members  of  a 
copartnership,  a  receiver  would  be  appointed.  And  the 
grounds  for  the  relief  in  such  case  were,  that  no  such  con- 
fidence exists  as  between  the  representatives  of  the  deceased 
partners,  as  existed  between  the  partners  themselves.1 

§  531.  Ordinarily,  in  case  of  the  death  of  a  single  mem- 
ber of  a  copartnership,  since  the  surviving  partner  has  a 
legal  right  to  possession  of  the  firm  assets  and  to  wind  up 
the  business,  he  will  not  be  deprived  of  this  right  by  a  re- 
ceiver, unless  upon  proof  of  mismanagement  or  of  danger 
to  the  partnership  effects.2  And  while  it  is  true  that  equity 
interferes  by  a  receiver  with  much  less  reluctance  when  the 
partnership  has  been  dissolved,  than  when  it  is  still  in  ex- 

1  Phillips  v.  Atkinson,  2  Bro.  C.  when  both  are  dead,  there  is  no 

C,   272.     "  Where  there  is  a  co-  confidence  between  the  representa- 

partnership,"    says  Lord  Kenyon,  tives,  and  therefore  the  court  will 

"there  is  confidence  between  the  appoint  a  receiver." 

parties,  and  if  the  one  dies  the  con-  -'  Connor    v.     Allen,    Harring. 

fidence   in   the  other  partner  re-  (Mich.),  371;  Walker  v.   House,  4 

mains,   and  he  shall  receive;  but  Md.  Ch.,  39. 


CIIAr.  XIII.]  PARTNERSHIPS.  463 

istence,  yet  where  the  proceedings  are  instituted  against  a 
surviving  partner  by  the  representatives  of  a  deceased  mem- 
ber of  the  firm,  the  court  will  not  interfere  without  being 
first  satisfied,  by  the  mismanagement  or  improper  conduct 
of  the  survivor,  that  the  confidence  reposed  in  him  was  mis- 
placed.1 

§  532.  "Where,  however,  the  surviving  partner  is  guilty 
of  mismanagement  and  of  improper  conduct  in  his  control  of 
the  firm  business,  a  different  case  is  presented,  and  courts  of 
equity  are,  under  such  circumstances,  inclined  to  a  some- 
what liberal  exercise  of  their  extraordinary  jurisdiction,  in 
behalf  of  the  representatives  of  a  deceased  partner.2  And 
in  case  of  the  death  of  one  member  of  a  firm,  in  the  ab- 
sence of  any  partnership  articles,  or  of  any  provision  for  a 
continuance  of  the  business  by  the  administrators  or  repre- 
sentatives of  a  deceased  partner,  if  the  survivor  refuses  to 
proceed  within  a  reasonable  time  to  close  up  the  firm  busi- 
ness, and  continues  to  manage  it  in  his  own  name,  and  for 
his  own  benefit,  equity  will  grant  an  injunction  against  its 
continuation  and  will  appoint  a  receiver,  upon  a  bill  filed 
by  the  administrator  of  the  deceased  partner.3  In  such  a 
case,  the  survivor  is  regarded  as  a  trustee  for  the  creditors 
and  representatives  of  the  deceased  partner.  And  the  laws 
of  the  state  requiring  an  executor  or  administrator  to  close 
up  the  estate  of  the  deceased  within  one  year,  the  same 
rule  was  held  applicable  by  analogy  to  the  surviving  part- 
ner, and  he  having  delayed  and  refused  a  settlement  for  a 
period  of  fourteen  months,  using  the  firm  property  during 
this  entire  period  for  his  own  benefit,  it  was  held,  that  there 
had  been  such  improper  delay  as  to  warrant  the  interposi- 
tion of  equity.4  So  where,  by  the  terms  of  the  partnership 
articles,  it  is  provided  that  in  case  of  the  death  of  either 

1  Walker  u.  House,  4Md.Ch.,  39.  ^Holden's  Adm'rs  v.  McMakin, 

2Holden's  Adm'rs  v.  McMakin,  Par.  Eq.  Cas.,  270. 

Par.  Eq.  Cas.,   270;  Madgwick  v.  ^Holden's  Adm'rs  v.  McMakin, 

Wimble,   6    Beav.,    495;  Miller  v.  Par.  Eq.  Cas.,  270. 
Jones,  39  111.,  54. 


464:  RECEIVERS.  [CHAP.  XIII. 

partner,  the  option  shall  be  given  his  representatives  of  con- 
tinning  the  business,  but  upon  the  death  of  one  partner  the 
survivors  insist  that  they  are  entitled  to  continue  the  firm 
with  the  funds  of  the  deceased,  and  to  compel  his  repre 
sentatives  to  be  partners  therein,  they  are  entitled  to  a  re- 
ceiver as  against  the  surviving  partners.1 

§  533.  The  administratrix  of  a  deceased  partner  has  a 
sufficient  interest  in  the  firm  property,  as  the  personal  rep- 
resentative of  the  deceased,  to  entitle  her  to  the  appoint- 
ment of  a  receiver  over  the  interest  of  the  deceased  in  the 
firm  assets,  upon  a  bill  for  the  settlement  of  the  partnership 
affairs.2  And  while  the  administrator  of  a  deceased  partner 
primarily  has  nothing  to  do  with  the  collection  of  firm  debts 
or  with  the  management  of  firm  assets,  it  being  the  duty  of 
the  survivors  to  settle  the  partnership  affairs,  yet  if  there 
should  be  an  unreasonable  delay  in  the  performance  of  this 
duty,  or  if  the  survivors  are  wasting  the  partnership  prop- 
erty, it  becomes  the  right  and  duty  of  the  administrator  to 
institute  proceedings  against  the  survivors  for  an  accounting 
and  a  receiver,  in  order  that  the  affairs  of  the  partnership 
may  be  properly  adjusted.  In  such  case,  the  administrator 
may  himself,  if  otherwise  a  proper  person,  be  appointed 
receiver,  the  court,  however,  requiring  him  to  give  an  addi- 
tional bond  with  satisfactory  security.3    The  proper  decree 

iMadgwick  v.  Wimble,  6  Beav.,  rily,  the  administrator  has  nothing 

495  to  do  with  either  the  partnership 

2  Clegg  v.  Fish  wick,  1  Mac.  &  G.,  assets  or  the  partnership  debts.  The 
094  surviving  partners  take  the  exclu- 

3  Miller  v.  Jones,  39  111.,  54.  The  sive  legal  title  to  the  former  for  the 
principles  by  which  courts  of  equity  payment  of  the  latter.  If  any  as- 
are  governed,  in  this  class  of  cases,  sets  remain  in  their  hands  after 
are  very  clearly  stated  in  the  opin-  payment  of  all  liabilities,  they 
ion  of  the  court  by  Mr.  Justice  Law-  should  account  to  the  administra- 
rence,  p.  60,  as  follows:  "  The  law  tor  for  the  distributive  share  of  the 
governing  the  relations  of  the  ad-  deceased,  which  then  becomes,  for 
ministrator  of  a  deceased  partner  the  first  time,  assets  in  his  hands  as 
to  the  surviving  partner,  so  far  as  administrator.  If,  however,  there 
concerns  any  questions  involved  in  is  an  unreasonable  delay  on  the 
this  case,  is  well  settled.     Prima-  part  of  the  surviving  partners  in 


CHAP.  XIII.]  PARTNERSHIPS.  465 

in  such  a  case  is,  that  the  receiver  be  appointed  upon  giving 
the  required  bond,  and  that  the  surviving  partners  pay  over 
to  him  such'  money  as  has  come  to  their  hands,  and  has  not 
been  expended  by  them  in  the  payment  of  partnership  debts 
and  in  the  legitimate  expenses  of  the  business.  They  should 
also  be  required  to  deliver  to  the  receiver  all  evidences  of 
debt  and  choses  in  action  against  debtors  of  the  firm,  and 
all  personal  property,  if  any,  belonging  to  the  firm,  and 
should  be  enjoined  from  the  collection  of  any  debts  due  to 
the  partnership.1 

§  534.  In  the  class  of  cases  under  consideration,  when 
the  administrator  or  representative  of  the  deceased  partner 
procures  the  appointment  of  a  receiver  of  the  partnership 
effects,  the  receiver  by  virtue  of  his  appointment  is  invested 
with  all  the  rights  and  equities  of  the  deceased  partner,  for 
the  purposes  of  the  trust  with  which  he  is  clothed.  And  he 
completely  represents  the  equitable  rights  of  the  administra- 
tor and  of  the  deceased,  for  the  purpose  of  administering 
the  assets  of  the  firm  and  applying  them  in  payment  of  the 
partnership  indebtedness.2 

§  535.  Where  a  legatee  of  a  deceased  partner  was  enti- 
tled to  his  share  of  the  profits  accruing  from  the  partner- 
ship business,  and  continued  the  business  with  the  surviving- 
member  of  the  firm  for  a  long  period  of  years,  being 
treated  as  a  partner  and  receiving  his  share  of  the  profits, 
and  he  afterward  filed  a  bill  for  a  dissolution,  and  defend- 
ant denied  his  right  to  an  accounting  or  to  any  relief,  upon 
the  ground  that  plaintiff,  being  a  minister,  was  incapaci- 
tated under  an   act  of  parliament  from  engaging  in  any 

closing  the  affairs  of  the  partner-  the  complete    adjustment  of    the 

ship,  or  if  they  are  wasting  the  partnership  affairs.     The  adminis- 

partnership  property,  it  is  then  the  trator  himself,  if  a  proper  person, 

right  and  duty  of  the  administrator,  may  be  made  receiver,  but  in  that 

if  the  partnership  creditors  remain  event  the  court  should  require  him 

inactive,   to  file  a  bill,  as  in  the  to  give  a  new  bond  as  such." 

present  instance,  calling  the  sur-  i  Miller  v.  Jones,  39  111.,  54. 

vivors  to  account  and  praying  for  -  Tillinghast  v.  Champlin,  4  R.  I., 

an  appointment  of  a  receiver  and  173. 
30 


466  RECEIVERS.  [CHAP.  XIII. 

trading  business,  and  defendant  claiming  the  entire  prop- 
erty for  himself,  a  receiver  was  allowed.1 

§  536.  In  Louisiana,  it  is  held,  that  a  court  having  juris- 
diction of  an  action  for  the  settlement  of  partnership  affairs, 
has  power  to  appoint  a  receiver,  notwithstanding  the  death 
of  one  partner  and  the  appointment  of  an  executor  or  ad- 
ministrator of  his  estate ;  and  that  such  appointment  is  of 
itself  sufficient  authority  for  the  receiver  to  institute  an 
action  to  recover  money  due  the  firm.2 

§  537.  Where  a  bill  in  equity  is  filed  by  creditors  of  a 
partnership  against  the  surviving  members  of  the  firm,  for 
the  settlement  of  the  firm  accounts  and  for  a  receiver,  and 
the  answer  admits  all  the  material  facts  alleged  in  the  bill, 
it  is  proper  to  appoint  a  receiver  to  take  charge  of  the 
partnership  assets.3 

1  Hale  v.  Hale,  4  Beav.,  369.  3  Dick  v.  Laird,  4  Crancb  C.  C, 

2  Helme  v.  Little  John,  12  La.  An.,    667. 
298. 


CHAP.  XIII.]  PARTNERSHIPS.  467 


V.  Functions  and  Duties  of  the  Receiver. 

§  538.     Duty  to  collect  debts ;  entitled  to  assets ;  will  not  be  enjoined ; 
rights  of  third  persons. 

539.  Takes  whole  equitable  title  to  firm  property ;  may  bring  suit,  suo 

motu,  to  obtain  possession ;  choses  in  action. 

540.  Selection ;  partner  allowed  to  act  without  salary ;  holds  funds  as 

officer  of  court. 

541.  Court  will  aid  receiver  in  obtaining  assets  in  hands  of  surviving 

partners. 

542.  Partner  acting  as  receiver  can  not  withhold  funds  as  due  to  him 

personally. 

543.  Sale  not  allowed  by  receiver  of  inferior  court,  pending  appeal  as 

to  its  jurisdiction. 

544.  Receiver  required  to  produce  books  and  accounts  for  examina- 

tion. 

545.  Payment  of  partnership  debts. 

546.  Appointed  to  collect  debts  which  defendants  are  enjoined  from 

collecting ;  payment  to  plaintiff. 

547.  Insane  hospital ;  sale  of  lease  and  good- will ;  injunction  against 

continuing  same  business. 

548.  Receiver  over  husband  on  bill  for  divorce,  not  entitled  to  part- 

nership property. 

549.  Receiver  over  brewing  business,  functions  of. 

550.  Retiring  partner  compelled  to  pay  notes,  may  have  action  against 

receiver  of  new  firm. 

551.  Purchaser  of  partner's  interest  not  allowed  to  interfere  with  re- 

ceiver. 

552.  Funds  in  receiver's  hands  not  subject  to  garnishment. 
552  a.  When  receiver  not  required  to  pay  deposit  in  full. 

§  538.  Upon  the  appointment  of  a  receiver  in  an  action 
for  the  dissolution  of  a  partnership,  it  is  his  duty  to  proceed 
without  delay  to  collect  the  outstanding  debts.1  And  when 
a  receiver  of  partnership  effects  is  appointed  in  proceedings 
under  judgments  against  the  firm,  and'  the  appointment  has 
become  perfected  by  his  giving  the  requisite  security,  he 
becomes  at  once  entitled  to  possession  of  the  firm  assets, 
which  are  regarded  as  being  in  the  custody  of  the  court, 
and  not  to  be  disposed  of  without  a  hearing  of  all  par- 

1  Jackson  v.  DeForest,  14  How.  Pr.,  81. 


4GS  RECEIVERS.  [CHAP.  XIII. 

ties  in  interest.  And  it  is  improper,  in  such  case,  to  enjoin 
the  receiver  from  the  management  of  the  property  or  fund, 
since  this  would  be  in  effect  equivalent  to  restraining  the 
court  itself  from  disposing  of  the  funds  which  may  come 
into  the  hands  of  its  officer.1  But  the  appointment  of  a  re- 
ceiver, in  an  action  for  an  accounting  and  settlement  of 
partnership  affairs,  will  not  be  extended  so  as  to  include  and 
direct  the  taking  possession  of  specific  property  alleged  to 
belong  to  the  firm,  when  the  question  of  whether  it  is  or  is 
not  partnership  property  is  directly  in  issue  by  the  plead- 
ings, and  is  one  of  the  points  in  controversy  in  the  litiga- 
tion.2 And  upon  an  application  for  a  receiver  in  partnership 
cases,  the  court  will  not  undertake  to  determine  what  is  and 
what  is  not  partnership  property,  as  between  members  of 
the  firm  and  third  persons,  and  if  disputes  arise  with  refer- 
ence to  any  particular  property  claimed  by  third  persons, 
the  proper  course  is  to  determine  the  controversy  by  an  ac- 
tion either  for  or  against  the  receiver.3 

§  539.  A  receiver  of  the  effects  of  a  partnership,  ap- 
pointed in  an  action  for  the  settlement  of  the  firm  business, 
is  regarded  as  vested  with  the  whole  equitable  title  to  the 
partnership  property,  without  any  assignment  for  that  pur- 
pose, and  in  an  action  to  obtain  possession  of  the  property 
lie  represents  the  interests  therein  of  all  parties  to  the  suit 
in  which  he  was  appointed.  And  it  is  held,  that  to  enable 
him  to  properly  discharge  his  trust,  he  may,  suo  ?notu,  and 
without  special  leave  of  the  court,  bring  an  action  to  pos- 
sess himself  of  the  property  to  which  he  is  officially  enti- 
tled, incurring  no  risk  thereby  except  as  to  costs,  and,  least 
of  all,  have  the  persons  against  whom  he  brings  such  action 
the  right  to  object  that  he  brings  suit  without  leave  of 
court.4  And  since  a  receiver's  authority  is  conferred  by 
law,  and  not  like  that  of  a  voluntary  assignee  of  the  par- 

1  Van  Rensselaer  v.  Emery,  9  3  Higgins  v.  Bailey,  7  Rob.  (N. 
How.  Pr.,  135.  Y.),  613. 

2  Gregory  v.  Gregory,  1  Sweeny,  4  Tillinghast  v.  Champlin,  4  R. 
613.  I.,  173. 


CIIAT.  XIII. J  PARTNERSHIPS.  469 

ties,  a  receiver  of  a  partnership  succeeds,  not  only  to  the 
legal  title  of  the  partners  as  joint  tenants,  but  also  to  the 
equitable  rights  and  remedies  of  the  firm  and  of  its  bene- 
ficiaries.1 Ordinarily,  however,  the  receiver  is  not  entitled 
to  sue  for  the  recovery  of  debts  due  to  the  firm  without  leave 
of  court.2  But  in  an  action  brought  by  the  receiver  to  fore- 
close a  vendor's  lien  upon  real  estate  which  has  been  sold 
by  him,  it  constitutes  no  defense  that  one  of  the  partners 
was  not  a  party  to  the  suit  in  which  the  receiver  was  ap- 
pointed, when  it  is  not  shown  that  such  partner  was  then 
alive  and  within  the  jurisdiction  of  the  court,  or  that  he 
had  a  substantial  interest  in  the  partnership.3  And  when 
the  receiver  is  authorized  to  sell  all  the  property,  choses  in 
action  and  effects  of  the  firm  within  the  jurisdiction  of  the 
court,  a  purchaser  at  such  sale  wrill  acquire  a  good  title  to 
choses  in  action  and  accounts  due  to  the  firm  from  persons 
residing  beyond  the  limits  of  the  state,  the  partners  them- 
selves residing  within  the  state  and  the  court  having  full 
jurisdiction  over  them.  In  such  case,  the  members  of  the 
firm  can  not  afterward  maintain  an  action  against  the  pur- 
chaser to  compel  him  to  account  for  the  proceeds  which  he 
has  collected  from  parties  residing  beyond  the  state.4 

§  540.  As  regards  the  selection  of  a  proper  person  to  be 
appointed  receiver  over  a  copartnership,  upon  the  dissolu- 
tion of  the  firm,  the  general  principles  governing  in  the 
selection  of  receivers  are  applicable,  and  these  have  been 
elsewhere  discussed.5  A  plaintiff  partner,  in  an  action  for 
a  dissolution  of  the  firm,  has  sometimes  been  appointed  re- 

1  Wallace  v.  Yeager,  4  Phila.  R.,  has  become  insolvent  and  assigned 

251;   Pearce  v.  Gamble,    72  Ala.,  Ins  interest  for  the  benefit  of  his 

341.  creditors,  Ogden  v.  Gregg,  29  Hun, 

2Fincke  v.  Funke,  25  Hun,  GIG.  146. 

And  see  as  to  the  right  of  such  a  3Stelzer  v.  La  Rose,  79  Ind.,  435. 

receiver  to  maintain  an  action  to  4  Loney  v.    Penniman,   43    Bid., 

recover  firm    goods    which    have  130. 

been  seized  under  a  chattel  mort-  5See  chapter  III,  ante,  Of  Selec- 

gage  executed  by  one  member  of  tion  and  Eligibility, 
the  firm  after  the  other   partner 


470  RECEIVERS.  [CHAP.  XIII. 

ceiver,  although  the  practice  in  this  country  is  an  unusual 
one,  and  only  to  be  justified  upon  the  implied  condition 
that  he  will  discharge  the  duties  of  his  trust  free  of  charge. 
Such  a  receiver  will  not,,  therefore,  be  allowed  any  compen- 
sation for  his  services  in  managing  the  property  entrusted 
to  his  charge.1  But  if  the  partners  having  a  three-fourths 
interest  in  the  firm  agree  upon  one  of  their  number  as  re- 
ceiver, and  the  principal  creditors  of  the  firm  unite  in  the 
application  for  his  appointment,  he  being  otherwise  well 
qualified  for  the  position,  it  is  proper  to  appoint  him  upon 
his  undertaking  to  act  without  compensation.2  The  English 
practice  seems  to  be  to  give  each  of  the  partners  liberty  to 
propose  himself  to  act  as  receiver  without  salary.3  But  the 
partner  who  may  be  appointed  no  longer  acts  in  the  capac- 
ity or  sustains  the  relation  of  a  partner,  but  is  an  officer  of 
the  court,  having  given  due  security  to  account  for  the 
moneys  which  he  may  receive  in  his  official  capacity,  and 
being  responsible  directly  to  the  court  for  his  conduct.4 
Where,  therefore,  the  defendant  partner  is  appointed  re- 
ceiver, in  an  action  for  the  settlement  of  partnership  affairs, 
and  uses  a  part  of  the  firm  assets  in  private  speculations 
for  his  own  benefit,  the  other  partner  can  not  maintain  a 
bill  in  equity  for  a  division  of  the  profits  realized  out  of 
the  speculation,  the  defendant  holding  the  funds  not  in  the 
capacity  of  a  partner,  but  as  a  receiver  and  officer  of  the 
court.5 

1Brien  v.  Harriman,  1  Tenn.  Ch.,  transaction;  the  relation  of  part- 

467.  ners  did  not  exist  between  the  par- 

2 Todd  v.  Eich,  2  Term.  Ch.,  107.  ties  at  the  time;  it  had  been  dis- 

3Blakeney  v.  Dufaur,  15  Beav.,  solved,   and    defendant    held    the 

40;  Sargant  v.  Bead,  1  Ch.  D.,  600.  moneys,  not  as  partner,  but  as  re- 

4Blakeney  v.  Dufaur,  15  Beav.,  ceiver.     We  know  of  no  principle 

40.  which  creates  such  a  relation  be- 

5  Whitesides  v.  Lafferty,  8  tween  a  receiver  and  a  party  to  a 
Humph.,  150.  The  court,  Turley,  suit,  as  makes  him  liable  for  profits 
J.,  say,  p.  151 :  "  There  is  no  pre-  made  by  a  use  of  the  money  dur- 
tense  for  saying  that  complainant  ing  the  continuance  of  his  receiver- 
is  entitled  to  this  division,  upon  the  ship ;  he  is  an  officer  appointed  by 
ground  that  it  was  a  partnership  the  court,  responsible  to  the  court 


CHAP.  XIII.]  PARTNERSHIPS.  471 

§  541.  A  receiver  in  partnership  cases  is  entitled  to  and 
will  be  allowed  by  decree  of  court  the  possession  of  all 
money  in  the  hands  of  the  surviving  partners,  as  well  as  all 
evidences  of  indebtedness  and  choses  in  action  due  to  the 
firm,  and  all  assets  and  personal  property  of  the  firm.  And 
the  court  may,  if  necessary,  enforce  its  decree  for  the  de- 
livery of  such  assets  by  the  surviving  partners  to  the  re- 
ceiver, by  process  of  attachment.1 

§  542.  Where,  pending  an  action  for  the  dissolution  of  a 
firm  and  the  settlement  of  its  affairs,  one  of  the  partners  is 
appointed  receiver,  he  will  not  be  allowed,  by  virtue  of  his 
appointment,  to  withhold  partnership  funds,  collected  in  his 
capacity  as  receiver,  upon  the  ground  that  they  are  due  to 
him  personally,  since  to  allow  such  an  application  of  the 
funds  would  necessarily  defeat  the  very  object  of  his  ap- 
pointment, and  would  constitute  a  flagrant  breach  of  trust. 
And  the  partner  acting  as  receiver  has  no  greater  right  to 
the  control  of  funds  collected  by  him  in  that  capacity  than 
have  his  copartners,  the  entire  fund  being  under  the  control 
and  subject  to  the  disposal  of  the  court.2 

{'or  the  discharge  of  his  duties,  and  receivers,  partners  or  others  are 
personally  liable  for  any  loss  of  the  thus  permitted  to  retain  the  fund 
funds  in  his  hands."  from  creditors,  and  as  the  cause 
1  Miller  v.  Jones,  39  111.,  54.  progresses,  involving  them  in  new 
2Gridley  v.  Conner,  2  La.  An.,  litigation,  how  can  the  partnership 
87.  Eustis,  C.  J.,  says,  p.  89:  be  settled  in  the  presence  of  these 
"  .  .  We  deem  it  proper  to  state  hydra  pretensions?  The  retention 
what  we  conceive  to  be  the  law  in  of  funds  collected  under  the  author- 
relation  to  the  obligations  of  a  part-  ity  of  the  court  is  a  flagrant  breach 
ner,  who,  pending  a  suit  for  a  of  trust,  and  the  power  to  compel 
settlement  and  liquidation  of  a  their  immediate  subjection  to  its 
partnership,  collects  money  belong-  control  itself  unquestionable;  and 
mg  to  the  partnership  under  the  without  the  vigilant  and  efficient 
appointment  from  the  court.  A  exercise  of  this  power  on  all  proper 
partner  so  receiving  it  has  no  right  occasions,  the  judicial  settlement 
to  withhold  it  from  the  action  and  of  the  concerns  of  a  partnership 
control  of  the  court,  under  any  plea  would  become  a  mere  farce.  After 
or  pretense  personal  to  himself.  He  the  dissolution  of  a  partnership, 
can  not  be  permitted  to  defeat  the  and  pending  its  liquidation,  a  part- 
very  object  of  his  appointment,  by  ner  is  not  permitted  to  do  any  act, 
violating  or  evading  his  trust.     If  still  less  make  use  of  the  partner- 


472  RECEIVERS.  [CHAT.  XIIT. 

§  543.  "When  proceedings  are  pending  in  a  court  of  in- 
ferior common-law  jurisdiction  for  the  settlement  of  part- 
nership affairs,  and  a  receiver  has  been  appointed,  but  the 
question  of  the  jurisdiction  of  the  inferior  court  is  in  doubt,  it 
is  improper  for  that  court,  pending  an  appeal  for  the  de- 
termination of  its  jurisdiction,  to  direct  its  receiver  to  sell 
the  partnership  propert}^,  and  such  saie  should  be  held  in 
abeyance  until  the  question  of  jurisdiction  is  properly  de- 
termined.1 

§  ."t44.  A  receiver  of  a  partnership  may  be  required  by 
order  of  court,  upon  the  application  of  defendants  in  the 
cause,  to  produce  for  examination  betore  a  master  in  chan- 
cery all  books  of  account  relating  to  his  management  of 
the  firm  business,  or  to  receipts  ana  payments  made  by 
him  in  and  about  the  business;  but  the  court  will  not  order 
him  to  submit  to  an  inspection  of  the  books  upon  his  own 
premises,  since  it  can  not  order  that  defendants  may  enter 
another  man's  house.2 

§  545.  In  Louisiana,  it  has  been  held,  that  the  payment 
of  partnership  debts  by  a  receiver  appointed  by  consent  of 
the  partners,  out  of  funds  collected  by  him  in  his  official 
capacity,  constituted  a  sufficient  answer  to  a  rule  upon  the 
receiver  to  show  cause  why  he  should  not  pay  the  money 
into  court,  the  receiver  being  treated  as  the  agent  of  the 
parties  for  the  purposes  of  such  payment.  It  was  accord- 
ingly held  to  be  error,  on  the  hearing  of  the  rule  to  show 
cause,  to  reject  testimony  offered  by  the  receiver  to  prove 

ship  funds  in  a  manner  inconsist-  Conner  was  permitted  to  retain  as 
ent  with  the  purpose  of  a  just  and  a  partner  the  money  he  has  col- 
proper  settlement ;  and  it  has  been  lected  as  receiver,  and  confound  it 
held  that,  where  a  partner  has  col-  with  the  partnership  affairs.  We 
lected  partnership  money  under  cir-  think  the  money  thus  collected 
cumstances  from  which  an  agree-  ought  to  have  been  paid  into  court, 
ment  on  his  part  not  to  receive  it  and  that  Conner  had  no  more  right 
can  be  inferred,  and  where  his  re-  over  it  than  his  copartners  had." 
t/eiving  it  was  contrary  to  good  J  McNab  v.  Noonan,  28  Wis.,  434. 
faith,  he  may  be  held  to  pay  the  2Maund  v.  Allies,  4  Myl.  &  Cr., 
money  into  court.     In  this  case,  503. 


CHA?.  XIII.]  PARTNERSHIPS.  473 

that  he  had  paid  the  firm  debts,  and  that  they  were  justly 
due.1 

§  546.  Upon  a  hill  by  one  member  of  a  firm  for  a  disso- 
lution, a  receiver  should  be  appointed  to  collect  such  debts 
as  the  remaining  partners  are  enjoined  from  collecting;  and 
the  receiver  thus  appointed  may  be  required,  by  order  of 
court,  to  pay  over  to  plaintiff  such  proportion  of  the  collec- 
tions as  he  is  entitled  to  receive.2 

§  547.  "When  the  chief  value  of  a  partnership  business 
is  its  good-will,  which  has  been  built  up  by  the  joint  efforts 
of  all  the  partners,  and  the  business  is  of  such  a  nature  that 
it  is  impossible  for  a  receiver  to  conduct  it,  as  in  the  case  of 
a  partnership  for  carrying  on  an  insane  hospital  and  laza- 
retto for  foreign  immigrants,  it  is  proper  for  the  court  to 
direct  the  receiver  to  sell  the  lease  of  the  premises  where 
the  business  is  conducted,  together  with  the  good-will.  And 
in  such  case,  for  the  purpose  of  giving  efficacy  to  the  sale 
of  the  good-will,  the  court  will  permit  either  of  the  parties 
to  become  a  purchaser,  and  will  enjoin  the  remaining  par- 
ties from  conducting  the  same  business  in  that  locality.3 

§  54S.  Where,  upon  a  bill  for  divorce,  filed  by  the  wife 
against  the  husband  who  has  absconded,  a  receiver  is  ap- 
pointed to  take  charge  of  the  husband's  effects,  his  appoint- 
ment does  not  divest  the  husband's  title  to  partnership 
property,  and  the  receiver  has  no  right  to  dispossess  the 
other  partner.  If,  therefore,  he  has  taken  possession  of 
the  firm  property  under  a  misapprehension  of  his  rights  and 
duties,  he  will  be  required  to  make  restitution  thereof  to 
the  other  partner.4 

§  549.  A  receiver  appointed  over  a  partnership  stock  in 
trade,  in  the  business  of  brewing,  has  been  directed  to  act 

1  Kellar  v.  Williams,  3  Rob.  (La.),  the    business,     see    McMahon    v. 

321.  McClernan,  10  W.  Va.,  419. 

2Maherr.  Bull,  44  111.,  97.    As  to  3  Williams  v.  Wilson,   4  Sandf. 

the  right  of  the  partners  to  a  partici-  Ch. ,  379. 

pation  in  the  profits  realized  by  the  i  Haniill  v.  Harnill,  27  Md.,  679. 
receiver  during  his  continuance  of 


474  RECEIVERS.  [CHAP.  XIII. 

us  clerk  in  the  trade,  and  to  collect  in  debts  according  to 
the  course  of  the  business,  to  pay  excise  duties  and  other 
charges,  and  to  bring  actions  in  the  name  of  the  partners.1 

§  550.  "When,  upon  dissolving  a  partnership,  it  is  agreed 
between  the  partners  that  the  firm  notes  shall  be  paid  by 
the  members  continuing  in  business  under  a  new  partner- 
ship, a  part  of  the  consideration  for  such  agreement  being 
the  sale  of  the  retiring  partners  interest,  who  is  afterward 
compelled  to  pay  the  notes,  he  has  the  same  remedy  against 
a  receiver  of  the  assets  of  the  new  firm  to  recover  the 
amount  paid,  that  he  would  have  had  against  the  new 
firm  itself  before  the  appointment  of  a  receiver,  and  may 
maintain  an  action  against  the  receiver  to  recover  the 
amount  paid.2 

§  551.  "Where,  in  an  action  to  dissolve  a  partnership  and 
to  wind  up  its  affairs,  a  receiver  is  appointed  and  takes  pos- 
session of  the  firm  property,  a  subsequent  purchaser  of  one 
partner's  interest  in  the  firm  can  not,  as  assignee  or  pur- 
chaser of  such  interest,  interfere  with  the  rights  and  duties 
of  the  receiver,  or  with  any  property  in  his  hands,  since  he 
acquires  by  his  purchase  only  such  interest  as  his  vendor 
might  have  had  in  the  partnership  assets,  after  all  liabilities 
of  the  firm  were  discharged.3 

§  552.  A  receiver  appointed  on  a  bill  for  the  dissolution 
of  a  partnership,  being  an  officer  of  court,  and  the  funds  in 
his  hands  being  in  custody  of  the  law,  it  has  been  held  that 
such  funds  are  not  subject  to  attachment  or  garnishment  by 
the  firm  creditors,  and  can  only  be  disposed  of  by  direction 
of  the  court,  not  being  subject  to  the  action  of  the  parties 
to  the  litigation  or  of  their  creditors.4 

!Skipp  v.  Harwood,  Dick.,  114.  Hackett,  7  Cal.,  187,  holding  that, 

-AUynv.  Boorrnan,  30  Wis.,  684.  until  a  dissolution  of  the  partner- 

3Noonanv.  McNab,  30  Wis.,  277.  ship  has  been  judicially  declared 

4  Receiver  of    Adams   &  Co.   v.  and  a  receiver  ordered  to  make  a 

Roman,  unreported,  cited  in  opin-  pro  rata  distribution  of  the  assets 

ion    of    Terry,   J.,    in    Adams    v.  among  the  creditors,  they  are  not 

Hackett,  7  Cal.,  187.    But  see  opin-  prevented  from  resorting  to  adverse 

ion  of   Burnett,  J.,  in  Adams  v.  proceedings,  and  may  thereby  gain 


CHAP.  XIII.]  PARTNERSHIPS.  475 

§  552  a.  The  receiver  of  an  insolvent  copartnership  will 
not  be  required  to  pay  in  full  a  balance  due  from  such  firm 
to  creditors  who  had  deposited  money  with  the  firm  from 
time  to  time  as  security  for  advances,  the  deposit  not  being 
a  special  one,  or  of  any  specific  money,  and  neither  the  firm 
nor  the  receiver  having  any  specific  fund  upon  which  such 
creditors  have  a  charge  or  hen.1 

a  preference  over  less  diligent  cred-        l  Butler  v.   Sprague,   66  N.   Y. , 

itors.    And  see  Adams  v.  Woods,  8  392.     See,  also,  Attorney-General 

Cal.,  152;  Same  v.  Same,  9  Cal.,  24;  v.  Continental  Life  Insurance  Co., 

Naglee  v.  Minturn,  8  Cal.,  540.  71  N.  Y.,  325. 


CHAPTEK  XIV. 

OF  RECEIVERS  OVER  REAL  PROPERTY. 

I.  Principles  Upon  Which  the  Relief  is  Granted,     ...  §  553 
II.  Receivers  as  Between  Tenants  in  Common, 603 

III.  Receivers  as  Between  Vendors  and  Purchasers,    .    .    .     609 

IV.  Functions  of  the  Receiver, 618 

I.  Principles  Upon  Which  the  Relief  is  Granted. 

§  553.     The  jurisdiction  well  established,  but  cautiously  exercised ;  courts 
averse  to  interfering  in  limine  with  possession  under  title. 

554.  English  doctrine  of  interference  only  in  aid  of  equitable  title : 

distinction  as  to  personalty  and  realty ;  conflicting  claimants, 
heirs  at  law. 

555.  Relief  refused  when  there  is  adequate  remedy  at  law. 

556.  Appointment  does  not  affect  title  of  either  party ;  does  not  pre- 

vent statute  of  limitations  from  running. 

557.  Receiver  rarely  granted  against  defendant  in  possession,  claiming 

under  legal  title ;  the  general  rule  stated. 

558.  Exceptions  to  the  rule  based  on  probability  that  plaintiff  will 

prevail,  and  upon  danger  to  the  property. 

559.  Receiver  refused  when  plaintiff's  right  is  doubtful  and  no  danger 

is  shown. 

560.  Probability  of  plaintiff's  success  not  sufficient,  as  against  long 

acquiescence,  and  when  no  danger  is  shown. 

561.  Not  granted  when  notice  of  lis  pendens  will  protect  plaintiff's 

rights. 

562.  The  rule  applied  to  case  of  lessor  and  lessee. 

563.  Danger  to  property  an  important  element ;  dissensions  in  relig- 

ious society. 

564.  Distinction  between  appointing  receivers,  and  continuing  those 

already  in  possession. 

565.  Departure  from  rule ;  fraud  by  defendant  in  obtaining  posses- 

sion ;  inadequate  consideration  and  undue  influence. 

566.  Title  shown  by  plaintiff,  none  by  defendant ;  prevention  of  vex- 

atious litigation ;  abuse  of  trust  and  insolvency  of  defendant. 

567.  Appointed  on  bill  by  creditors  when  no  personalty  shown ;  rights 

of  judgment  creditors  in  possession  not  prejudiced ;  probable 
title  in  plaintiff  and  danger  to  rents. 


CHAP.  XIV.]  REAL    PROPERTY,  477 

§  568.     Receiver  in  proceedings  to  determine  widow's  dower. 

569.  Receiver  in  proceedings  to  establish  will,  or  to  execute  trusts  of 

will. 

570.  When  granted  in  contest  between  heir-at-law  and  devisee  under 

will. 

571.  Appropriation  of  rents  and  profits  as  against  heirs ;  objection  to 

administration  by  pretended  heirs. 

572.  When  granted  as  against  tenant  for  life. 

573.  Vendor  not  allowed  relief  because  of  vendee's  insolvency  and 

commijsion  of  waste. 

574.  When  granted  for  protection  of  annuitants. 

575.  Relief  generally  refused  in  actions  of  ejectment. 

576.  When  granted  in  ejectment,  for  preservation  of  rents  and  profits 

pendente  lite. 

577.  Plaintiff  allowed  receiver  after  recovery  of  lands,  when  neces- 

sary to  preserve  rents  and  profits. 

578.  When  granted  over  leasehold  interest. 

579.  Assignee  of  lease  not  entitled  to  receiver. 

580.  Not  granted  over  house  on  leased  ground  because  of  insolvency 

of  defendant  in  possession. 

581.  Landlord  may  re-enter  on  expiration  of  term;  discharge  of  re- 

ceiver. 

582.  When  same  receiver  extended  to  subsequent  applications. 

583.  Right  to  rents  as  affected  by  order  extending  receiver. 

584.  Receiver  in  behalf  of  cestui  que  trust  as  against  trustees. 

585.  Relief  granted  for  protection  of  rent  charge. 

586.  Denied  plaintiff  in  suit  to  enforce  mechanic's  lien. 

587.  Granted  in  aid  of  proceedings  in  bankruptcy. 

588.  Granted  in  action  to  apply  trust  property  in  payment  of  debts 

equal  in  priority. 

589.  Nature  of  defendant's  interest  in  real  property;   benefice  of 

clergyman. 

590.  When  refused  over  ungathered  crop ;  when  allowed. 

591.  Refused  incases  of  marriage  settlements;  when  allowed  after 

divorce. 

592.  Difficulty  in  collection  of  rent  no  ground  for  receiver. 

593.  Plaintiff's  acquiescence,  and  participation  in  fraud,  a  bar  to 

relief. 

594.  Granted  when  property  has  escheated  to  state. 

595.  Refused  on  defendant  paying  rents  and  profits  into  court. 

596.  One  not  party  to  the  cause  can  not  object ;  remainder-man  and 

tenants  can  not  restrain  receiver  from  turning  them  out  of 
possession. 

597.  Practice  in  putting  receiver  in  possession ;  who  responsible  for 

loss  by  owner  remaining  in  possession. 

598.  When  granted  before  answer. 


47S  RECEIVERS.  [CHAP.  XIV. 

§  599.     Effect  of  appointing  receiver  over  corporation  upon  title  to  its 
real  estate. 

600.  Order  should  state  precisely  over  what  property  receiver  is  ap- 

pointed ;  appointment  may  be  over  part  only. 

601.  When  plaintiff  entitled  to  funds  in  receiver's  possession. 

602.  Real  estate  subject  to  judgment  and  execution  on  termination  of 

receiver's  functions. 
602  a.  "When  receiver  allowed  against  plaintiff  suing  in  forma  pauperis. 

§  553.  The  jurisdiction  exercised  by  courts  of  equity 
in  appointing  receivers  over  real  property,  for  its  better 
protection  and  to  secure  the  rents  and  profits  pendente  lite, 
although  well  established  both  in  England  and  in  America, 
is  yet  regarded  as  an  extremely  delicate  branch  of  equity 
jurisdiction,  and  one  whose  exercise  should  be  guarded  with 
the  utmost  caution.  It  will,  hereafter,  be  shown  that  the 
courts  are  exceedingly  averse  to  any  interference  in  limine 
with  the  possession  of  real  estate  by  a  defendant,  claiming 
under  legal  title,  and  that  equity  will  only  interpose  a  re- 
ceiver, as  against  such  possession,  in  cases  of  great  emer- 
gency, the  general  rule  being  that  conflicting  questions  of 
title  should  be  determined  in  courts  of  law.1  And  while, 
as  will  be  shown,  there  are  frequent  cases  where  the  relief  is 
granted,  upon  special  circumstances  of  an  equitable  nature 
appealing  strongly  to  the  conscience  of  the  court,  such  cases 
will  be  found  upon  investigation  to  illustrate  and  strengthen 
the  general  tendency  already  indicated. 

§  554.  It  was  the  established  doctrine  of  the  English 
Chancery,  that  the  court  would  never  exercise  its  extraor- 
dinary powers  by  appointing  a  receiver  over  real  property, 
in  behalf  of  a  claimant  out  of  possession,  except  in  aid  of 
an  equitable  title.2  And  a  broad  distinction  is  recognized 
between  interfering  with  the  possession  of  real  estate  by  a 
receiver,  and  cases  where  the  relief  is  extended  for  the 
preservation  of  personal  property  pendente  lite;  since  in 
the  case  of  personalty  it  is  the  whole  property,  the  corpus, 
which  equity  is  called  upon  to  protect  by  a  receiver,  and 

lSee  post,  §  557.  2Carrow  v.  Ferrior,  L.  R.,  3  Ch. 

App.,  719. 


CHAP.  XIV.] 


REAL   PROPERTY. 


479 


which  may  be  lost  without  the  interference  of  the  court, 
while  in  the  case  of  real  property  the  court  is  only  asked 
to  preserve  the  rents  and  profits,  which  are  merely  the  pro- 
ceeds of  the  property  de  anno  in  annum,  and  which  do  not, 
therefore,  demand  the  same  summary  interference.1  "Where, 
therefore,  there  are  several  conflicting  claimants  to  an  es- 
tate asserting  their  title  as  heirs-at-law  of  the  deceased 
owner,  and  no  impediment  is  shown  to  a  trial  of  their  rights 
at  law,  equity  will  not  entertain  jurisdiction  of  the  contro- 
versy by  appointing  a  receiver  in  behalf  of  one  of  the 
claimants  not  in  possession  who  presents  no  equitable  title, 
but  a  mere  legal  title  or  right  which  may  be  asserted  and 
established  in  a  court  of  law.  ISTor  does  the  fact  that  there 
are  outstanding  terms,  in  such  case,  present  any  additional 
ground  for  relief  in  equity  by  a  receiver.2 


1  CaiTOW  v.  Ferrior,  L.  R. ,  3  Ch. 
App.,  719.  And  see  opinion  of 
Vice-Chancellor  Wood  in  Talbot  v. 
Hope  Scott,  4  Kay  &  J.,  132. 

'-'Cai-row  v.  Ferrior,  L.  R.,  3  Ch. 
App.,  719.  This  was  a  contest  be- 
tween three  claimants  as  heirs-at- 
law  of  a  deceased  lunatic,  two  of 
the  heirs  having  filed  separate  bills, 
alleging  the  existence  of  outstand- 
ing terms,  and  praying  for  a  re- 
ceiver of  the  real  estate  until  the 
question  of  heirship  could  be  deter- 
mined, the  third  claimant  proceed- 
ing by  a  petition  in  lunacy.  The 
right  to  a  receiver  was  denied,  Lord 
Justice  Wood  observing  as  follows, 
p.  728 :  "In  this  case  there  are 
three  claimants,  none  of  whom  has 
established  his  title  as  heir-at-law. 
There  is  no  privity  or  contract  be- 
tween them.  There  is  nothing 
binding  any  of  them  to  take  any 
other  course  than  that  of  standing 
on  his  strict  rights,  and  we  are 
asked  to  decide  that  one  of  them 
can  come  here  and  ask  the  court  to 


put  a  receiver  in  possession,  though 
there  is  no  allegation  of  any  imped- 
iment to  a  trial  at  law  beyond  the 
existence  of  outstanding  terms.  I 
considered  this  point  much  in  Tal- 
bot v.  Hope  Scott,  4  K.  &  J.,  96, 
but  do  not  regret  having  heard  it 
reargued,  though  considering  the 
vast  amount  of  property  involved 
in  that  case,  and  the  hostile  feeling 
between  the  parties,  the  fact  of 
there  having  been  no  appeal  is  sig- 
nificant. I  then  came  to  the  con- 
clusion that  there  was  no  jurisdic- 
tion to  appoint  a  receiver  on  the 
application  of  a  claimant  who  was 
out  of  possession  and  did  not  claim 
by  an  equitable  title,  and  I  am  still 
of  the  same  opinion.  The  plaint- 
iff's case  was  there  rested  on  the 
ground  of  the  court's  jurisdiction 
to  interfere  for  the  protection  of 
property  pending  litigation,  but 
that  question  had  been  fully  dis- 
cussed in  Jones  v.  Jones,  3  Meriv., 
161,  which  seemed  to  me  to  have 
so  settled  the  law  that  I  ventured 


480 


RECEIVERS. 


[chap.  XIV. 


§  555.  It  necessarily  follows  from  the  doctrines  above 
considered,  as  well  as  from  the  general  principles  governing 
the  extraordinary  jurisdiction  of  courts  of  equity,  that  the 
aid  of  an  injunction  and  a  receiver  will  not  be  granted  in  a 
contest  concerning  the  possession  of  real  property,  when 
adequate  redress  may  be  had  at  law  in  the  usual  forms  of 
action  appropriate  to  such  end ;  and  in  all  such  cases,  equity 
will  leave  the  parties  aggrieved  to  pursue  their  legal  remedy. 
Thus,  upon  a  bill  by  a  devisee  of  real  estate,  claiming  title 
and  right  of  possession,  and  alleging  that  defendant  hac 
unlawfully  intruded  into  possession,  and  has  continued  to 
hold  without  right  or  authority,  receiving  the  products  and 
depriving  plaintiff  of  all  means  of  support,  the  bill  seeking 


to  say  there  had  been  no  case  for 
twenty  years  in  which  a  person 
claiming  by  a  dry,  legal  title  as 
heir-at-law,  and  out  of  possession, 
had  ever  attempted  to  obtain  the 
appointment  of  a  receiver.  The 
question  as  to  the  effect  of  out- 
standing terms  is  disposed  of  by 
Bainbrigge  v.  Baddeley,  3  Mac.  & 
G.,  413.  The  Vice-Chancellor  has 
observed,  upon  this  decision,  as 
being  the  reversal  by  the  Lord 
Chancellor  of  a  decision  by  a  judge 
having  much  greater  experience 
than  himself  in  courts  of  equity, 
I  ut  I  can  only  look  at  it  as  a  judg- 
ment of  a  lord  chancellor  differing 
from  an  inferior  judge.  It  was 
held  in  that  case  that  the  existence 
of  outstanding  terms  makes  no 
difference  as  to  the  appointment  of 
a  receiver,  the  course  of  tbe  court 
being  merely  to  put  the  outstand- 
ing terms  out  of  the  way,  and  not 
to  treat  them  as  introducing  any 
new  equities.  It  was  urged  that 
this  was  not  a  case  where  the  court 
i-;  asked  to  turn  any  one  out  of  pos- 
km,  but  a  case  where  the  pos- 
session is  vacant,  and  that  the  court 


will  interfere  to  protect  the  prop- 
erty as  it  does  to  protect  personal 
estate  pending  a  litigation  as  to 
probate.  I  had  occasion  to  con- 
sider this  in  Talbot  v.  Hope  Scott. 
4  K.  &  J.;  90,  and  I  observed  that 
the  two  cases  were  different.  It 
may  be  true,  on  the  highest  general 
principles,  that  there  ought  to  be 
no  difference  in  this  respect  be- 
tween real  and  personal  property, 
but  our  law  clearly  regards  them 
very  differently,  and  looks  upon 
the  person  in  possession  of  real  es- 
tate1 as  entitled  to  keep  it  till  some 
one  else  shows  a  better  title.  Un- 
less the  person  in  possession  of  real 
estate  is  affected  by  some  equity, 
this  court  will  not  interfere.  The 
consideration  is  not  unimportant 
that  personal  estate  may  be  made 
way  with  altogether,  if  this  court 
does  not  interfere,  but  only  the 
rents  of  real  estate  can  be  lost. 
But,  in  my  opinion,  the  leading 
principle  governing  the  case  is  that 
this  court  does  not  interfere  as  to 
real  estate  unless  there  is  an 
equity." 


CHAP.  XIV.]  REAL    PROPERTY.  481 

an  injunction  and  a  receiver  and  to  quiet  and  declare  plaint- 
iff's title,  no  sufficient  cause  is  presented  to  warrant  the  aid 
of  equity,  even  though  it  is  alleged  that  the  defendant  in 
possession  is  insolvent.  In  such  a  case,  plaintiff  claiming 
the  legal  title,  should  assert  that  title  in  a  court  of  law  by 
some  appropriate  action,  and  equity  will  not  interfere.1 

§  556.  In  actions  affecting  the  title  to  real  property, 
when  a  receiver  is  sought  to  take  charge  of  the  property, 
and  to  preserve  the  rents  and  profits  pending  litigation,  the 
appointment  of  the  receiver  in  no  manner  affects  the  title 
of  either  party  to  the  litigation,  although  the  relief  can 
only  be  granted  in  behalf  of  one  having  an  acknowledged 
interest,  or  when  there  is  a  strong  probability  of  his  ulti- 
mate recovery.  The  receiver  is  appointed  for  the  benefit 
of  the  person  making  the  application,  and  for  any  other 
parties  in  interest  who  may  choose  to  avail  themselves  of 
the  proceedings.  The  primary  object  in  making  such  ap- 
pointment is  the  preservation  of  the  property,  or  of  its 
rents  and  profits,  from  waste  and  destruction,  while  the 
ulterior  objects  had  in  ATiew  are  those  contemplated  by  the 
suit  itself.  And  if  plaintiff  ultimately  succeeds  in  estab- 
lishing his  title  to  the  entire  property,  the  appointment  may 
be  regarded  as  having  been  entirely  for  his  benefit.2  And 
it  would  seem  that  the  appointment  of  a  receiver  does  not 
so  alter  the  possession  of  the  estate  in  controversy,  in  the 
person  who  shall  ultimately  be  adjudged  entitled  thereto  at 
the  time  of  the  appointment,  as  to  prevent  the  operation  of 
the  statute  of  limitations  during  the  controversy.3 

§  557.  It  has  already  been  intimated,  that  equity  is  ex- 
tremely averse  to  any  interference  with  the  possession  of 
real  property,  by  a  defendant  claiming  under  a  legal  title. 
And  it  may  be  laid  down  as  a  general  proposition,  supported 
by  an  overwhelming  array  of  authority,  both  in  England 
and  in  America,  that  courts  of  equity  proceed  with  extreme 
caution  in  granting  receivers  as  against  a  defendant  in  pos- 

»  Pfeltz  v.  Pfeltz,  14  Md.,  370.  » Anonymous,  2  Atk.,  15. 

« Chase's  Case,  1  Bland,  206. 
31 


4S2  RECEIVERS.  [CHAP.  XIV. 

session,  and  will  rarely  interfere  with  such  possession  by- 
appointing  a  receiver  in  limine,  upon  a  mere  legal  title  as- 
serted by  plaintiff.  And  whenever  the  contest  is  simply  a 
question  of  disputed  title  to  the  property,  plaintiff  asserting 
a  legal  title  in  himself,  against  a  defendant  in  possession 
and  receiving  rents  and  profits  under  claim  of  legal  title, 
equity  refuses  to  lend  its  extraordinary  aid  by  interposing 
a  receiver,  just  as  it  refuses  an  injunction  under  similar  cir- 
cumstances, leaving  the  plaintiff  to  assert  his  title  in  the 
ordinary  forms  of  procedure  at  law.  And  while,  as  will 
hereafter  be  shown,  there  are  special  circumstances  of  fraud 
or  of  imminent  danger  of  loss  or  of  irreparable  injury, 
which  may  sometimes  warrant  a  departure  from  the  general 
rule,  yet  in  the  absence  of  any  such  controlling  circum- 
stances, the  courts  insist  upon  its  rigid  enforcement,  and 
refuse  to  deprive  a  defendant  of  his  possession,  under  claim 
of  title,  until  plaintiff's  right  is  established  at  law.1  A  de- 
parture from  the  rule  can  only  be  justified  upon  strong 
grounds  of  judicial  necessity,  or  in  case  of  fraud  clearly 
proven,  or  of  imminent  danger  unless  immediate  possession 
is  taken  by  the  court.2  And  the  burden  rests  upon  com- 
plainant to  make  out  a  clear  case  to  justify  the  relief,  and 
the  court  should  be  reasonably  satisfied  that  he  will  finally 
recover  and  that  the  benefit  of  such  recovery  will  be  lost  to 

1  Lloyd  v.  Passingham,  16  Ves.,  Corlies,  2  Edw.  Ch.,  281;  Gregory 

59;  S.  C,  3  Meriv.,  697;  Mordaunt  v.  Gregory,  33 N.  Y.  Supr.  Ct.  R.,  1 ; 

v.  Hooper,  Amb.,  311;  Owen  v.  Ho-  Clark  v.  Ridgely,  1   Md.  Ch.,  70: 

man,  3  Mac.  &  G.,  378,  affirmed  by  Chicago  &  Allegheny  Oil  &  Mining 

the  House  of  Lords,  4  H.  L.  Rep.,  Co.  v.  U.  S.  Petroleum  Co.,  57  Pa. 

997;  Bainbrigge  v.  Baddeley,  3 Mac.  St.,  83;  S.  C,  6  Phila.,  521;  Cofer 

&  G.,  413;  Talbot  v.  Hope  Scott,  4  v.  Echerson,  6  Iowa,  502;  Emerson 

Kay  &  J.,  96;  Lancashire  v.  Lan-  and  Wall's  Appeal,  95  Pa.  St.,  258; 

cashire,    9    Beav.,    120;    Skinners  De  Walt  v.  Kinard,  19  S.  C,  286; 

Company  v.  Irish  Society,  1  Myl.  Rollins  v.  Henry,   77  N.  C,  467; 

&  Cr.,  162 ;  Municipal  Commission-  Twitty  v.  Logan,  80  N.  C,  69. 
ers  of  Carrickfergus  v.  Lockhart,        2 Lloyd  v.  Passingham,  16  Ves., 

Ir.  Rep.,  3  Eq.,  515;  Parkin  v.  Sed-  59.     And  see  S.  C,  3  Meriv.,  697, 

dons,  L.  R.,  16  Eq.,  34;  Vause  v.  where  a  subsequent  application  fot 

Woods,   46  Miss.,   120;   Schlecht's  a  receiver  was  also  refused. 
Appeal,  60  Pa.  St.,  172;  Willis  v. 


, 


CHAP.  XIV.] 


REAL   PROPERTY. 


4S3 


him  without  a  receiver  before  it  will  interfere;  and  an  affi- 
davit upon  information  and  belief  is  not  sufficient  ground 
for  interposing.1  Kor  Trill  defendant  be  deprived  of  bis 
possession  by  a  receiver,  unless  it  is  made  to  appear  that 
there  is  great  risk  of  ultimate  loss  to  the  property,  and  of 
insolvency  on  the  part  of  defendant,  so  that  he  will  be 
unable  to  respond  to  a  final  decree.-  And  in  the  absence 
of  fraud,  or  of  any  privity  between  the  parties,  or  of  any 
equities  touching  the  conscience  of  defendants  in  posses- 
sion, equity  invariably  refuses  to  extend  the  aid  of  a  receiver, 
until  plaintiff  has  established  his  title  at  law.3 


1  Davis  v.  Reaves,  2  Lea,  649. 

-Vause  v.  Woods,  46  Miss.,  120. 

» Talbot  v.  Hope  Scott,  4  Kay  & 
J.,  96.  a  leading  case,  in  which  the 
English  authorities  are  carefully 
reviewed.  Vice-Chancellor  Wood 
observes,  p.  Ill :  "  With  regard  to 
tbe  first  part  of  the  relief  prayed 
by  the  bill,  namely,  the  receiver, 
which  is  really  the  substantial  part 
of  the  case,  I  apprehend  that,  as  to 
the  settled  estates,  it  is  too  clear 
for  any  contention  at  the  present 
day,  that  this  court  will  not  inter- 
fere at  the  instance  of  a  person  al- 
leging a  merely  legal  title  in  him- 
self against  other  persons  in  pos- 
session of  the  estates,  to  grant  a 
receiver  and  put  them  out  of  pos- 
session. In  Lord  Fin  gal  v.  Blake,  2 
Molh,  78,  and  in  the  subsequent 
case  of  Lloyd  v.  Lord  Trimleston, 
id.,  81,  there  are  some  observations 
of  Sir  A.  Hart,  which  seem  to  have 
a  leaning  in  favor  of  such  inter- 
ference, and  to  which  I  shall  refer 
presently ;  but  there  is  no  decision 
which  in  the  least  bears  out  the 
proposition  that  the  court  will  in- 
terfere under  such  circumstances, 
for  it  is  manifest  that,  in  the  first 
of  these   cases,  the   receiver   was 


granted  by  consent.  That  there 
may  be  a  possible  case  in  which  this 
court  would  interfere  to  prevent 
absolute  destructive  waste,  where 
the  value  of  the  property  would  be 
destroyed  if  no  steps  were  taken,  I 
can  understand ;  but  I  have  found 
nothing  that  bears  any  resemblance 
to  the  doctrine  contended  for,  that 
at  the  instance  of  a  person  alleging 
a  mere  legal  title,  this  court  will  in- 
terfere against  another  who  is  in 
possession,  to  deprive  him  of  that 
possession.  I  have  known,  and 
everybody  must  have  known,  nu- 
merous instances  where  ejectment 
has  been  brought  for  very  valuable 
property,  upon  a  merely  legal  title ; 
yet  I  think  I  may  say  that,  for  the 
last  twenty  years,  if  not  for  longer, 
no  one  has  ever  dreamt  of  approach- 
ing this  court,  however  heavy  the 
litigation  between  the  parties,  for 
the  purpose  of  obtaining  a  receiver, 
until  he  had  established  his  right 
at  laAv  to  possession  of  the  estates. 
The  ground  of  the  rule  adopted  by 
the  court,  in  this  respect,  I  conceive 
to  be  extremely  sound ;  the  general 
ground  being  that  the  court  can 
not  interfere  with  a  legal  title  of 
any  description,   unless   there   be 


4S4  RECEIVERS.  [cnAP.  XIV. 

§  55S.  The  grounds  of  the  exceptions  to  the  general  rule, 
as  above  stated,  will  be  found,  upon  examination,  to  resolve 
themselves  into  two  general  conditions,  both  of  which  must 
combine  to  warrant  a  court  of  equity  in  granting  a  receiver 
as  against  a  defendant  in  possession.  These  conditions  are, 
first,  that  plaintiff  must  show  a  strong  ground  of  title,  with 
a  reasonable  probability  that  he  will  ultimately  prevail;  and 
second,  that  there  is  imminent  danger  to  the  property,  or 
to  its  rents  and  profits,  unless  the  court  shall  interpose.1 
Especial  importance  is  attached  by  the  courts  to  the  first  of 
the  conditions  here  named,  and  when  the  parties  are  liti- 
gating the  right  to  real  property,  and  the  litigation  depends 
upon  questions  to  be  decided  at  law,  defendant  being  in 
possession  and  standing  on  his  legal  title,  it  is  regarded  as 
an  indispensable  condition  to  the  exercise  of  the  jurisdiction 
of  equity  by  a  receiver,  that  a  reasonable  probability  be 
shown  to  the  court  that  the'  parties  claiming  to  disturb  the 
possession  will  ultimately  establish  their  title  to  the  prop- 
erty.2    And  when  this  question  is  involved  in  much  obscu- 

sonie  equity  by  which  it  can  affect  out  by  affidavit  and  by  defendant's 

the  conscience  of  the  defendant,  answer,   a    receiver  was  allowed. 

Where  there  is  an  entire  want  of  But  the  reporter  adds,  that  "  it  was 

privity  between  the  plaintiff  and  a  very  strong  case,  and  almost  all 

the  defendant,  and  the  defendant  the  facts  insisted  on  by  defendant 

is  simply  a  wrong-doer  at  law,  this  in  his  answer  were  denied  by  affi- 

court  does  not  take  upon  itself  to  davits." 

interpose,  unless  in  very  excep-  2Bainbrigge  v.  Baddeley,  3  Mac. 
tional  cases."  &  G.,  414.  See,  also,  Cofer  v.  Ech- 
iMordauntv.  Hooper,  Amb.,  311;  erson,  6  Iowa,  502;  Gregory  v. 
Bainbrigge  v.  Baddeley,  3  Mac.  &  Gregory,  33  N.  Y.  Supr.  Ct.  E.,  1. 
G.,  414.  See,  also,  Mayo  v.  Bainbrigge  v.  Baddeley,  3  Mac.  & 
McPhaul,  71  Ga.,  758.  In  Mor-  G.,  414,  was  an  action  to  set  aside 
daunt  u.  Hooper,  Amb.,  311,  Lord  a  will,  under  which  defendant 
Hardwicke  stated  that  a  motion  claimed  title  to,  and  was  in  posses- 
for  a  receiver  was  very  uncommon  sion  of,  the  property  in  dispute, 
where  the  matters  in  dispute  de-  The  Master  of  the  Bolls  having  ap- 
pended on  a  mere  legal  title,  al-  pointed  a  receiver  of  the  property 
though  a  case  might  be  so  circum-  upon  the  application  of  plaintiff, 
stanced  as  to  induce  the  court  to  the  order  was  discharged  on  motion 
grant  it.  And  both  the  grounds  before  the  Lord  Chancellor.  Lor.l 
stated  in  the  text  being  fully  made  Truro  observes,  p.  417:  "It  is  ad- 


i 


CIIAP.  XIV.] 


EEAL    PKOrEKTY. 


485 


rity,  and  is  dependent  upon  the  construction  of  deeds,  which 
is  attended  with  doubt  and  difficult}?-,  the  court  may  prop- 
erly refuse  to  interfere.1 

§  559.     As  illustrating-  the  general  doctrine  already  stated, 


mitted  that,  if  the  will  of  1818, 
under  which  the  defendant  claims, 
can  be  substantiated  as  a  valid  will, 
the  plaintiff  has  no  case.  The 
validity  of  the  will  is  a  question 
which,  from  its  nature,  must  be 
decided  at  law.  .  .  Now,  it  ap- 
pears to  me  that  the  jurisdiction  of 
the  court  to  grant  a  receiver  can 
not  be  denied,  nor  do  I  understand 
it  to  be  denied.  There  are  few 
cases  that  can  be  stated  in  which 
the  court  has  not  jurisdiction  when 
it  is  essential  to  the  justice  of  the 
case  to  interfere  to  preserve  the 
property  for  the  party  entitled. 
But  that  jurisdiction  is  governed 
by  circumstances  applicable  to  the 
different  stages  of  proceedings,  and 
to  different  cases;  but  when  the 
parties  are  litigating  the  right  to 
property,  and  the  litigation  depends 
upon  questions  then  to  be  decided 
at  law,  what  are  the  circumstances 
in  which  the  jurisdiction  is  to  be 
exercised  and  is  properly  applicable 
in  granting  a  receiver?  There  are, 
I  apprehend,  two  grounds,  and 
two  only;  first,  that  there  is  a  rea- 
sonable probability  of  success  on 
the  part  of  the  plaintiff ;  and  sec- 
ondly, that  the  property,  the  sub- 
ject of  the  suit,  is  in  danger.  This 
motion,  however,  is  made  against 
a  party  who  is  in  possession ;  that 
possession  is  not  shown  to  have 
been  obtained  by  violence  or  by 
wrong,  using  the  word  '  wrong '  in 
the  sense  of  being  without  color  of 
title,  but  under  the  sanction  of  the 
court.     What,  under  such  circum- 


stances, is  it  proper  for  me  to  pre- 
sume? What  is  the  prima  facie 
case,  as  far  as  concerns  his  title? 
Am  I  wan-anted  in  presuming  that 
the  will  under  which  he  claims  is 
bad  or  good?  I  apprehend  I  ought 
to  presume,  until  I  have  the  case 
so  before  me  as  to  enable  me  judi- 
cially to  form  an  opinion  upon  the 
subject,  that  the  will  is  good.  This 
court  ought  not,  in  any  case,  to 
disturb  the  possession  of  a  party 
who  stands  upon  his  legal  title, 
without  a  reasonable  probability 
that  the  plaintiff  will  ultimately 
succeed.  I  consider,  therefore, 
that  one  indispensable  ground  for 
the  exercise  of  the  jurisdiction  is 
the  reasonable  probability  shown 
to  the  court  that  the  parties  claim- 
ing to  disturb  the  possession  will 
ultimately  establish  a  title  to  it.  I 
do  not  see  any  such  reasonable 
probability  here;  not  at  all  using 
that  expression  to  prejudice  the 
plaintiff's  title,  or  to  express  any 
opinion  upon  it.  His  case  may  be 
the  strongest  that  ever  was  pre- 
sented ;  it  may,  when  it  comes  to 
be  laid  before  the  proper  tribunal, 
entitle  him  to  a  verdict  without 
any  doubt  or  hesitation ;  but  I  have 
not  the  materials  before  me  to  war- 
rant me  in  coming  to  that  conclu- 
sion." 

1  Owen  v.  Homan,  3  Mac.  &  G., 
378,  affirmed  on  appeal  to  the 
House  of  Lords,  4  H.  L.  Rep.,  997. 
See,  also,  Cofer  v.  Echerson,  6 
Iowa,  502. 


4SG  RECEIVERS.  [CHAP.  XIV. 

it  is  lield  that  where  the  defendant  is  in  possession,  having 
the  legal  estate,  without  fraud,  and  also  claims  to  be  the 
equitable  owner,  there  being  a  doubt  as  to  the  question  of 
right  between  the  parties,  and  no  danger  alleged  or  shown 
as  to  the  rents  and  profits,  the  court  will  refuse  a  receiver.1 
So  where  the  contest  before  the  court  is  merely  as  to  the 
right  of  possession,  and  plaintiffs  show  no  peculiar  circum- 
stances or  immediate  danger  to  the  property,  requiring  the 
intervention  of  a  receiver,  the  only  ground  relied  upon  be- 
ing the  alleged  insolvency  of  defendant  in  possession,  equity 
will  not  interfere,  especially  if  there  is  doubt  as  to  plaint- 
iff's right  to  recover.2 

§  560.  ■  While  the  probability  that  plaintiff  will  ultimately 
succeed  hi  establishing  his  title  is  an  important  element  in 
determining  whether  a  receiver  shall  be  allowed  as  against 
a  defendant  in  possession,  yet  such  probability  is  not  of 
itself  sufficient  ground  for  interfering,  when  defendant's 
possession  has  been  acquiesced  in  for  a  long  series  of  years, 
and  no  danger  to  the  property  is  shown  from  a  continuance 
of  such  possession.3  And  when  the  property  in  controversy 
has  been  held  a.ncl  managed  and  its  proceeds  have  been  ap- 
plied by  a  corporation,  in  a  particular  manner  and  for  a 
long  period  of  years,  equity  will  not  disturb  such  possession 
by  a  receiver  and  an  injunction,  upon  the  ground  that  such 
application  is  a  breach  of  trust,  unless  the  court  is  perfectly 
satisfied  that  defendant  in  possession  is  a  mere  naked  trustee, 
without  any  right  or  discretion  in  the  management  of  the 
property.4 

§  561.  It  has  already  been  shown  that  equity  will  not 
disturb  the  possession  of  a  defendant  holding  under  claim 
of  legal  title,  by  appointing  a  receiver  when  adequate  re- 
dress may  be  had  at  law.  In  accordance  with  this  princi- 
ple, it  is  held  where  plaintiff  shows  no  probable  cause  for  his 

1  Lancashire  v.  Lancashire,  9  Carrickfergus  v.  Lockhart,  Ir.  Rep., 
Beav.,  120.  3  Eq.,  515. 

2  Cof er  v.  Echerson,  6  Iowa,  502.  4  Skinners  Company  v.  Irish  So- 

3  Municipal     Commissioners     of  ciety,  1  Myl.  &  Cr.,  162. 


CHAP.  XIV.]  KEAL   PROPERTY.  487 

ultimate  recovery,  and  where  it  is  apparent  that  the  filing 
of  a  notice  of  lis  pendmSy  in  accordance  with  the  practice 
of  the  state,  will  operate  effectually  to  prevent  a  transfer 
of  the  lands  in  controversy  pendente  lite,  and  will  protect 
plaintiff's  equitable  interest  therein,  if  any,  that  a  receiver 
will  not  be  granted.1 

§  562.  The  general  rule  already  stated,  denying  the  aid 
of  a  receiver  in  a  contest  as  to  title  as  against  a  defendant 
in  possession,  is  applicable  to  the  case  of  a  lessor  and  lessee 
of  real  estate,  and  equity  rarely  interferes  with  the  lessee's 
possession  by  granting  a  receiver.  The  lessee  being  clothed 
with  title  and  possession  under  his  lease,  and  being  in  the 
enjoyment  of  rights  apparently  legal,  will  not  be  deprived 
of  his  possession  by  a  receiver,  unless  under  very  urgent 
and  peculiar  circumstances.  And  to  entitle  him  to  relief  in 
such  a  case,  the  plaintiff  or  lessor  must  show  a  clear  right, 
with  such  attending  circumstances  of  danger  or  of  probable 
loss  as  will  move  the  conscience  of  a  chancellor.  Thus,  in 
the  case  of  a  lease  of  certain  premises,  conferring  upon  the 
lessee  the  right  to  bore  for  and  take  oil  therefrom,  the  lessee 
returning  as  rent  one-fourth  of  the  product  to  the  lessor,  in 
an  action  by  the  latter  in  equity  for  an  accounting  and  an 
injunction  against  the  lessee,  in  aid  of  an  action  at  law  for 
the  forfeiture  of  the  lease,  equity  will  refuse  an  injunction 
and  a  receiver  of  the  lessee's  portion  of  the  proceeds.2    But 

1  Gregory  v.  Gregory,  33  N.  Y.  covenant  in  the  lease,  and  a  forf  eit- 
Supr.  Ct.  R.,  1.  ure  thereby;  states  that  an  action 

2  Chicago  &  Allegheny  Oil  &  at  law  has  been  brought  to  enforce 
Mining  Co.  v.  The  United  States  the  forfeiture,  and  that  this  bill  is 
Petroleum  Co.,  57  Pa.  St.,  83;  S.  in  aid  thereof ;  and  then  prays  for 
C,  G  Phila.,  521.  The  court,  Ag-  an  account  of  all  the  oil,  and  for  the 
new,  J.,  say,  in  the  case  as  reported  appointment  of  a  receiver  as  be- 
in  57  Pa.  St.,  at  p.  89:  "  The  orig-  fore,  and  in  the  meantime  that  the 
inal  bill,  in  this  case,  prayed  for  a  defendants  shall  bo  restrained  from 
decree  of  forfeiture  of  the  lease  taking  and  disposing  of  any  oil  ob- 
held  by  the  defendants,  and  for  the  tained  upon  the  land.  The  prayer 
appointment  of  a  receiver  for  the  for  an  account  being  withdrawn, 
lessee's  share  of  the  oil.  The  the  relief  prayed  for  is  the  appoint- 
amended  bill  avers  breaches  of  the  ment  of  a  receiver  of  the  defend- 


4:88 


EECEIVEKS. 


[chap.  XIT. 


in  an  action  by  a  lessor  against  lessees  for  the  recovery  of 
possession  after  the  expiration  of  the  term,  the  title  being 
in  plaintiff  and  possession  being  wrongfully  withheld  by  de- 
fendants, who  are  insolvent,  a  receiver  may  properly  be 
appointed.1 

§  563.  Upon  an  application  for  a  receiver  to  take  charge 
of  real  estate  and  receive  the  rents  and  profits,  pending  a 
litigation  as  to  the  right  of  conflicting  claimants,  a  vital 
point  of  inquiry,  as  already  indicated,  is,  as  to  whether  there 
is  danger  to  the  property  by  suffering  it  to  remain  in  pos- 
session of  the  party  controlling  it.     Or,  in  other  words,  are 


ants'  portion  of  the  oil,  and  an  in- 
junction to  restrain  the  defendants 
in  the  meantime,  that  is,  until  the 
suit  at  law  is  determined. 
What,  then,  are  we  called  upon  to 
do?  Simply  to  appoint  a  receiver 
to  take  into  custody  and  to  deprive 
the  lessee  of  his  share  of  the  prod- 
uct until  the  plaintiffs  can  see 
whether  they  will  be  successful  in 
obtaining  a  judgment  of  forfeiture 
in  a  doubtful  case.  No  receiver  is 
asked  for  the  landlord's  portion, 
and  plainly  because  as  to  it  the 
purpose  is  to  require  delivery  with- 
out interruption.  The  actual  pur- 
pose is  to  take  into  custody  that 
which  will  be  mesne  profits  in  the 
event  of  establishing  the  forfeiture. 
Look  at  the  case  in  any  direction, 
and  all  that  is  in  it  is  to  obtain  our 
assistance  in  giving  effect  to  an  al- 
leged forfeiture,  and  to  restrain 
the  defendants  from  the  exercise 
of  their  legal  rights  under  the 
lease,  while  the  plaintiffs  are  en- 
gaged in  experimenting  at  law  for 
the  forfeiture.  It  is  not  for  the 
protection  of  a  clear  and  well  de- 
fined right,  and  to  prevent  an  irre- 
mediable injury  which  may  ensue 
if  we  do  not  intervene,  nor  is  it  the 


ordinary  case  of  one  who  shows  an 
equitable  right  in  the  subject  of 
custody,  and  asks  the  court  to  in- 
terfere for  its  security  until  the 
termination  of  litigation.  The  ap- 
pointment of  a  receiver  is  the  exer- 
cise of  a  power  in  aid  of  a  proceed- 
ing in  equity,  and  is  the  subject  of 
sound  discretion.  The  court  must 
be  convinced  that  it  is  needful  and 
is  the  appropriate  means  of  secur- 
ing a  proper  end.  Such  an  appoint- 
ment is  a  strong  measure,  and 
not  to  be  exercised  doubtingly. 
"Where  a  party  is  clothed  with  title 
and  possession  such  as  are  conferred 
by  a  lease  in  writing,  and  is  in  the 
enjoyment  of  rights  apparently 
legal,  a  receiver  will  not  be  ap- 
pointed unless  under  urgent  and 
peculiar  circumstances.  The  plaint- 
iff must  show  a  clear  right  in  such 
a  case,  or  a.  prima  facie,  with  such 
attending  circumstances  of  danger 
or  probable  loss  as  will  move  the 
conscience  of  a  chancellor  to  inter- 
fere. Finding  no  such  elements  in 
this  case,  the  bill  is  dismissed,  and 
the  costs  ordered  to  be  paid  by  the 
plaintiffs." 

iNesbitt  v.  Turrentine,  83  N.  C, 
535. 


I 


CHAP.  XIV.]  REAL   PROPERTY.  489 

there  any  special  circumstances  rendering  it  necessary  for 
the  better  preservation  of  the  property,  pendente  lite,  that 
it  should  be  taken  under  custody  of  the  court.  And  when 
no  such  circumstances  are  shown,  the  court  will  not  exercise 
its  summary  jurisdiction  by  a  receiver.  For  example,  where 
an  unincorporated  religious  society  holds  certain  real  estate, 
the  legal  title  to  which  is  vested  in  trustees  for  the  use  of 
the  society,  and  a  dissension  occurs  resulting  in  the  with- 
drawal of  one  portion  of  the  society  from  the  other,  and  the 
members  withdrawing  claim  to  hold  the  original  faith  of 
the  society  and  to  be  entitled  to  the  realty,  upon  a  bill  filed 
by  them  to  establish  their  right  to  the  property  as  against 
the  trustees  in  possession,  a  receiver  will  not  be  granted 
when  there  is  neither  proof  nor  allegation  before  the  court 
of  danger  to  the  property  from  waste  or  destruction  by  de- 
fendants, and  no  apprehension  of  injury  in  consequence  of 
the  property  remaining  in  their  possession,  or  under  their 
control,  pending  the  litigation.1 

1  Willis  v.  Corlies,  2  Eclw.  Ch.,  they  may  in  the  meantime  receive. 

281.       McCoun,     Vice-Chancellor,  Under  circumstances  like  these,  it 

says,  p.  286:   "The  defendants,  as  appears  unnecessary  to  appoint  a 

trustees  and  as   such  committee,  receiver,  nor  would  such  appoint- 

have  the  present  possession,  and  as-  ment  be  consistent  with  the  prin- 

sume  the  exercise  of  rights  in  those  ciples    by    which    this     court    is 

capacities.      Believing    themselves  governed.     .     .     After  all,  it  comes 

to  be  the  rightful  trustees  and  man-  back  to  the  only  inquiry  which  I 

agers,  they  take  care  to  preserve  apprehend    can   be  made  in  this 

the  property  as  their    own ;    and  stage  of  the  cause :  is  there  danger 

there  is  neither  proof  nor  allegation  to  the  property?    In  other  words, 

before  mo  of  the  danger  to  it  from  is  there  evidence  of  fraud  in  ob- 

acts  of  waste  or  destruction  by  de-  taining  the  possession,  or  any  spe- 

fendants,   or  any  apprehension  of  cial  circumstance  to  render  it  ncc- 

injury  in  consequence  of  the  prop-  essary  for  the  preservation  of  the 

erty  being  in  their  possession  or  un-  property  pendente  lite,  or  proper  in 

der  their  control  pending  the  liti-  the  exercise  of  a  sound  discretion 

gation.     Nor  is  it  alleged  that  the  for  the  interference  of  the  court  in 

defendants  are  irresponsible  men,  this  summary  manner?    As  there 

and  unable  to  make  good  the  loss  is  scarcely  a  color  of  pretense  for 

of    rents  to   the    complainants,  if  this  application  on  any  of  the  above 

they,  the  defendants,  should  be  de-  grounds,   I  must    refuse    it    with 

creed  to  account  for  rents  which  costs." 


490 


RECEIVERS. 


[chap.  XIV. 


§  564.  "While  courts  of  equity,  as  is  thus  shown,  are  ex- 
tremely averse  to  interfering  by  a  receiver  with  the  pos- 
session of  real  property  held  by  defendants  under  a  claim 
of  legal  title,  and  will  not  ordinarily  interpose  unless  there 
be  some  clear  equity  affecting  the  conscience  of  the  party 
in  possession,  yet  when  the  property  is  actually  in  posses- 
sion of  the  court  by  its  receivers,  and  a  proposition  is  pend- 
ing for  a  compromise  and  a  division  of  the  property  between 
the  different  claimants,  it  is  proper  for  the  court  to  continue 
its  custody  of  the  property  already  assumed,  until  the  rights 
of  the  parties  can  be  adjusted.  The  question  presented,  in 
such  case,  is  not  the  creation  but  the  continuance  of  the 
receivership,  and  the  burden  falls,  not  upon  the  applicant 
to  continue,  but  upon  those  who  seek  to  rescind  the  action 
of  the  court.  It  is  proper,  therefore,  under  such  circum- 
stances, to  continue  the  receiver  until  further  order.1 


1  State  v.  Allen,  1  Tenn.  Cb.,  512. 
The  distinction  is  clearly  stated  by 
Cooper,  Chancellor,  as  follows, 
p.  514:  ';If  this  application  was  to 
have  a  receiver  for  the  first  time 
upon  property  in  possession  of  the 
defendants  under  an  adverse  claim 
as  heirs  and  devisees  of  W.  P. 
Downs,  I  should  probably  refuse  it. 
The  court  is  very  slow  to  appoint  a 
receiver  of  realty  in  the  peaceable 
possession  of  defendants  under  a 
claim  of  right,  and  when  the  con- 
test is  between  claimants  of  the 
legal  title.  For  the  court  can  not 
interfere  with  the  legal  title,  unless 
there  be  some  equity  by  which  it 
can  affect  the  conscience  of  the 
party  in  possession.  And  such  in- 
terference is,  to  a  certain  extent, 
giving  relief,  and  upon  a  prelim  - 
inary  motion,  depriving  the  defend- 
ant of  a  present  use  and  enjoyment 
of  the  estate,  and  pro  tanto  and 
pro  tempore,  giving  a  decision 
against  him.      The   property  was 


not,  however,  at  the  filing  of  this 
bill,  in  the  peaceable  possession  of 
the  defendants.  On  the  contrary, 
it  was  in  the  custody  of  this  court, 
by  its  receivers,  at  the  instance  of 
several  of  these  defendants  setting 
up  adverse  claims  to  each  other. 
If  now,  in  this  attitude  of  affairs, 
the  claimants  choose,  in  view  of  a 
claim  hostile  to  all  of  them,  to 
agree  upon  a  division  of  the  prop- 
erty among  themselves  by  a  com- 
promise, and  not  by  a  judicial 
decision  of  their  respective  rights, 
the  question  of  the  appointment  of 
a  receiver  could  scarcely  be  said  to 
turn  upon  peaceable  possession 
under  a  legal  title.  The  previous 
litigation  and  the  previous  receiv- 
erships demonstrate  that  no  one  of 
the  claimants  is  yet  in  peaceably 
under  legal  right.  The  very  fact 
that  each  of  these  claimants  has  been 
able,  as  against  the  other,  to  have 
a  receiver  appointed,  proves  the  ex- 
istence of  some  equity  to  affect  the 


CHAP.  XIV.] 


KEAL   PE0PEKTY. 


491 


§  505.  Having  thus  considered  the  general  doctrine  of 
courts  of  equity,  denying  the  aid  of  a  receiver  as  against  a 
defendant  in  possession,  in  a  contest  concerning  the  legal 
title,  it  remains  to  examine  those  cases  where  a  departure 
from  the  rule  has  been  allowed,  upon  grounds  of  a  purely 
equitable  nature,  appealing  strongly  to  the  conscience  of  a 
chancellor.  The  element  of  fraud  in  obtaining  possession 
by  defendant  has  been  treated  by  the  courts  as  an  impor- 
tant feature  in  cases  where  a  departure  from  the  general 
rule  has  been  sanctioned.  And  where  it  is  sought  to  annul 
a  conveyance  of  real  estate  made  by  plaintiff,  upon  the 
ground  of  fraud  and  undue  influence  in  obtaining  the  con- 
veyance, if  upon  bill  and  answer  there  is  a  strong  prob- 
ability of  plaintiff  maintaining  his  cause  and  ultimately 
obtaining  the  relief  sought,  a  receiver  may  be  appointed  in 
the  first  instance.1     And  where,  in  such  an  action,  the  bill 


conscience  of  each,  and  authorizes 
the  appointment  of  a  receiver,  not 
to  deprive  them  of  a  previous  legal 
possession,  but  to  continue  the  cus- 
tody already  assumed  by  the  court 
until  the  rights  of  the  parties  can 
be  adjudicated.  The  question  is 
not  the  creation  but  the  continu- 
ance of  the  receivership;  not  the 
deprivation  of  an  existing  right, 
but  the  prevention  of  the  acquiring 
a  new  right,  it  may  be  by  collusion. 
The  burden  is  not  upon  the  appli- 
cant to  continue,  but  upon  those 
who  seek  to  rescind  the  receiver- 
ship. The  present  receiver  will  be 
continued  until  further  order." 

1  Huguenin  v.  Baseley,  13  Ves., 
105;  Stitwell  v.  Williams,  G  Madd., 
49,  1st  American  Edition,  38,  af- 
firmed by  the  Lord  Chancellor,  sub 
now.  Stilwell  v.  Wilkins,  Jac.,280. 
In  Huguenin  v.  Baseley,  13  Ves., 
105,  Lord  Erskine  observes,  p.  106 : 
"Two  distinct  questions  arise:  1st, 
whether  so  strong  a  probability  of 


title  appears  upon  this  bill  and  an- 
swer, as  will  induce  the  court,  upon 
the  principles  on  which  it  acts,  to 
consider  this  plaintiff  as  having  a 
strong  interest  to  have  the  estate 
secured,  in  case  she  should  obtain 
a  decree;  2dly,  whether  this  de- 
fendant, having  the  legal  estate  by 
adverse  title,  not  being  a  trustee  by 
his  admission,  a  receiver  ought  to 
be  appointed  by  interlocutory  order 
on  motion.  .  .  I  admit,  I  am 
not  in  this  way  to  decide  or  preju- 
dice this  cause.  All  that  it  is  nec- 
essary to  say  is,  that  there  is  a  very 
strong  probable  title  in  the  plaintiff 
to  call  back  this  estate,  upon  such 
terms  as  may  seem  proper  at  the 
hearing,  which  she  appears  to  have 
conveyed  under  such  chvn in- 
stances, reserving  only  an  interest 
for  life.  The  question  then  is, 
whether,  whatever  may  be  my 
opinion  of  the  complexion  of  this 
case  upon  the  bill  and  answer,  I 
ought  to  interfere  by  appointing  a 


492 


RECEIVERS. 


[CHAP.  XIV. 


shows  that  the  grantor  was  a  person  of  weak  intellect; 
young  and  inexperienced,  of  constant  habits  of  intoxication, 
and  ignorant  of  the  real  value  of  the  property  conveyed ; 
that  the  consideration  paid  was  grossly  inadequate  to  the 
value  of  the  property,  and  that  he  was  persuaded  to  execute 
the  deeds  under  the  impression  that  he  was  conveying  only 
a  life  estate,  an  appropriate  case  is  presented  for  a  receiver, 
when  the  answers  of  defendants  in  possession  merely  allege 
their  ignorance  of  the  facts  charged  in  the  bill,  without 
denying  those  facts.1  So  the  relief  has  been  granted  in  an 
action  to  set  aside  a  conveyance  alleged  to  have  been  pro- 
cured by  fraud  and  undue  influence  exercised  over  the 
grantor,  a  person  of  weak  intellect,  and  the  grantee  being- 
insolvent  aside  from  the  property  in  question.2 

§  566.     "When  plaintiff  shows  an  equitable  title  to  a  part 


receiver.  A  very  strong  case  has 
been  produced  in  favor  of  that. 
In  Vann  v.  Barnett,  2  Bro.  C.  C, 
158,  the  defendant  had  the  legal 
estate  in  trust  to  pay  himself.  But, 
as  one  of  the  ruling  principles  of 
this  court  is  that  there  must  be 
some  evil  actually  existing,  or  some 
evidence  of  danger  to  the  property 
if  the  court  should  not  interfere,  to 
induce  it  to  act  in  this  stage  of  a 
cause,  as  in  the  instance  of  waste, 
though  I  have  a  strong  inclination 
to  grant  a  receiver,  I  will  look  into 
the  authorities  before  I  determine." 
Upon  a  subsequent  day  Lord  Er- 
skine  observed:  "Under  all  the 
circumstances  of  the  case,  I  have 
no  doubt  of  the  jurisdiction  to  ap- 
point a  receiver.  But,  in  order  to 
avoid  the  expense  of  that,  the 
plaintiff  being  entitled  for  her  life 
to  an  annuity,  admitted  to  be  very 
near,  if  not  quite,  equal  to  the 
rents,  I  propose  an  inquiry  what 
arrears  of  the  annuity  are  due ;  the 
defendant    to    pay    the    amount 


forthwith,  to  give  security  for  the 
future  payments,  and  to  account 
for  the  rents  and  profits."  The 
order  was  drawn  up  accordingly. 

iStilwell  v.  Wilkins,  Jac,  280, 
affirming  S.  C,  sub  nom.  Stitwell 
v.  Williams,  6  Madd.,  49,  1st 
American  Edition,  38.  In  the  case 
as  reported  in  Jac. ,  280,  Lord  Eldon 
says,  p.  283:  "I  am  ready  to  ad- 
mit that  I  do  not  remember  any 
instance  of  a  receiver  being  so 
appointed,  but  still  the  question  is, 
whether  there  may  not  be  a  case 
where  it  ought  to  be  done.  If  the 
case  stated  be  true,  and  it  is  more 
than  probable  that  it  is  true,  the 
inadequacy  was  so  monstrous,  the 
situation  of  the  young  man  and 
the  state  of  his  intellect  were  such, 
that  it  is  hardly  possible  to  suppose 
that  the  transaction  can  stand ;  and 
I  think,  therefore,  that  this  is  a  case 
where  such  an  order  may  be  made, 
though  it  is  not  the  general  habit  of 
the  court." 

2  Mitchell  v.  Barnes,  22  Hun,  194. 


CHAP.  XIV.]  EEAL   PEOPEETY.  493 

of  the  property  in  controversy,  and  a  legal  and  equitable 
title  to  the  remainder,  and  defendant  shows  no  title,  either 
legal  or  equitable,  a  receiver  may  be  appointed  pending  the 
litigation.  And  an  additional  ground  for  the  relief  is  pre- 
sented, in  such  case,  when  it  appears  that  the  interference  of 
equity  may  prevent  vexatious  litigation,  there  being  a  great 
number  of  tenants  of  the  property,  and  a  probability  of 
prolonged  litigation,  unless  the  matter  is  determined  by  a 
court  of  equity.1  So  an  abuse  of  trust  by  the  party  in 
possession,  by  which  the  safety  of  the  property  is  endan- 
gered, coupled  with  his  insolvency  and  consequent  insecurity 
of  the  rents  and  the  profits,  will  warrant  the  court  in  ex- 
tending the  aid  of  a  receiver.2 

§  567.  It  was  the  doctrine  of  the  English  Court  of  Chan- 
cery, that  upon  a  bill  by  creditors  claiming  satisfaction 
against  both  the  real  and  personal  estate  of  the  debtor,  if  it 
appeared  probable  from  defendant's  answer  that  there  was 
no  personal  estate,  and  that  both  the  realty  in  defendant's 
possession  and  the  rents  and  profits  thereof  must  become 
responsible  for  the  demands,  the  court  might  appoint  a  re- 
ceiver in  the  first  instance,  although  the  power  was  recog- 
nized as  a  delicate  one.3  But  when  an  incumbrancer  seeks 
the  aid  of  equity  by  a  receiver  over  defendant's  real  estate, 
and  there  are  judgment  creditors  of  the  defendant  in  pos- 
session, the  appointment  will  be  made  without  prejudice  to 
the  rights  of  such  creditors.4  And  in  the  Irish  Court  of 
Chancery,  the  doctrine  is  held  that  the  court  has  full  juris- 
diction to  grant  a  receiver,  even  against  a  defendant  in  pos- 
session of  real  property,  in  an  action  for  the  recovery  of 
lands,  when  plaintiff  shows  a  probable  title  and  danger  of 
the  rents  being  lost.5  But  the  relief  will  not  be  granted  to 
the  owners  of  real  estate  merely  because  of  the  difficulty 
of  collecting;  rents  from  their  tenants.6 


'o 


iCole  v.  O'Neill,  3  Md.  Ch.,  174.        *  Davis  v.  Duke  of  Marlborough, 

*  Chase's  Case,  1  Bland,  213.  1  Swans.,  74. 

» Jones  v.  Pugh,  8  Ves.,  71.  5  Scott  v.  Scott,  13  Ir.  Eq.,  212. 

*In  re  Madden,  3  L.  R.,  Ir.,  172. 


49± 


RECEIVEKS. 


[CHAP.  XIV. 


§  568.  The  aid  of  equity  by  a  receiver  is  sometimes  in- 
voked for  the  protection  of  dower  interests  in  the  estate  of 
a  deceased  husband.  And  in  a  proceeding  by  a  widow  to 
have  her  dower  set  aside,  if  it  is  shown  that  the  property  is 
in  possession  of  and  controlled  by  a  person  who  is  insolvent, 
and  who  has  taken  the  benefit  of  the  state  insolvent  laws 
pending  the  litigation,  and  that  the  rents  and  profits  are 
exposed  to  imminent  danger  or  to  inevitable  loss,  a  receiver 
may  be  allowed.1  But  upon  a  bill  by  an  heir-at-law  and 
devisee  of  a  deceased  person  to  determine  the  widow's 
dower,  in  order  to  warrant  an  injunction  against  the  dis- 
posal of  the  property,  and  a  receiver  of  the  rents  and  profits, 
it  is  not  sufficient  merely  to  allege  that  the  rents  are  in 
jeopardy,  but  it  must  be  shown  how  they  are  jeopardized. 
And  when  there  is  no  allegation  that  the  rents  and  profits 
of  the  real  estate,  which  is  supposed  to  be  subject  to  the 
dower  interest,  will  be  lost  by  reason  of  insolvency  of  those 
receiving  them,  or  that  plaintiff  has  not  an  adequate  rem- 
edy at  law  for  such  of  the  rents  as  he  may  be  entitled  to,  a 
receiver  should  not  be  granted.2 

§  569.  The  jurisdiction  of  equity  by  the  appointment  of 
a  receiver  is  sometimes  invoked  for  the  protection  of  heirs 
or  devisees,  or  for  the  enforcement  of  trusts  created  by  the 
ancestor's  will.  And  upon  a  bill  by  children  of  a  testator 
to  establish  his  will,  and  to  enforce  the  performance  of  cer- 
tain trusts  in  favor  of  plaintiffs  upon  which  the  testator 
devised  his  property,  and  for  an  account  of  rents  and  profits, 
a  receiver  has  been  allowed  of  the  rents  and  profits,  when 
it  was  manifest  that  the  testator's  intentions  had  been  disre- 
garded.3 And  a  receiver  has  been  granted  upon  a  bill  filed 
by  parties  interested  in  the  execution  of  the  trusts  of  a  will, 
alleging  that  rents  had  not  been  collected,  and  that  incum- 
brancers were  threatening  to  take  possession  of  the  estate 
or  otherwise  proceed  for  the  recovery  of  their  mortgage 


i  Chase's  Case,  1  Bland,  206. 

2  Knighton  v.  Young,  22  Md.,  359. 


3Podmore  v.  Gunning,   5  Sim., 
485. 


CHAP.  XIV.]  REAL   PROPERTY.  495 

debts,  unless  a  receiver  should  be  appointed.1  Where,  how- 
ever, the  heir-at-law  is  in  possession,  equity  will  not  ordi- 
narily grant  a  receiver  in  an  action  to  carry  into  execution 
the  trusts  of  the  will  of  a  deceased  testator,  until  the  will 
has  been  proven,  when  it  is  not  admitted  by  answer,  since 
the  court  will  not  displace  the  possession  of  the  heir-at-law 
until  his  title  has  been  displaced.2  But  it  has  been  held, 
where  the  heir-at-law,  disputing  the  will  of  his  ancestor, 
enters  into  possession  of  the  devised  estates,  and  a  court  of 
equity  directs  an  issue  to  be  tried  at  law  as  to  the  validity 
of  the  will,  devisavit  vel  non,  upon  a  bill  by  the  executors 
against  the  heir  to  establish  the  will,  that  the  court  may 
properly  appoint  a  receiver  against  the  heir  in  possession, 
and  may  enjoin  him  from  committing  waste.3  But  a  leg- 
atee under  a  will,  whose  legacy  is  a  charge  upon  the  estate 
of  the  testator,  subject  to  prior  mortgages  and  other  charges, 
is  not  entitled  to  a  receiver  over  the  estate,  because  the 
rents  and  proceeds  are  being  applied  to  keep  down  the 
interest  on  such  charges.4  -\ 

§  570.  As  between  the  heir-at-law  and  a  devisee  under 
the  will  of  the  ancestor,  pending  litigation  concerning  the 
relative  rights  of  the  parties,  equity  does  not  interfere  as  of 
course  by  appointing  a  receiver  of  the  estate  against  a  dev- 
isee in  possession ;  and  in  the  absence  of  any  special  cir- 
cumstances of  mismanagement  or  danger  to  the  estate,  a 
receiver  will  be  refused,  and  the  parties  will  be  left  to  pur- 
sue their  remedy  at  law.5  In  such  cases,  the  court  proceeds 
upon  the  principle  that  the  heir,  if  he  recovers  at  all,  must 
recover  upon  the  strength  of  his  title  at  law,  and  the  pos- 
session of  the  devisee  under  the  will  is  regarded  as  a  lawful 
possession,  which  the  court  will  not  disturb  by  a  receiver.'1 
Nor  will  a  receiver  be  granted  upon  the  application  of  one 

lHartr.  Tulk,  6  Hare,  611.  5Schlecht's  Appeal,  60  Pa.  St., 

2 Dobbin -y.  Adams,  8  Ir.  Eq.,157.  172;  Knight  v.   Duplessis,   1  Ves., 

3Fingal  v.  Blake,  1  Mol.,  113.  324.    See  S.  C,  2  Ves.,  360. 

4  Faulkner  v.  Daniel,  3  Hare,  204,  6  Knight   v.    Duplessis,    2   Ves. , 

note.  360. 


490 


RECEIVERS. 


[chap.  xiv. 


claiming  as  a  devisee  under  a  will,  upon  a  bill  against  other 
devisees  and  an  heir-at-law  to  establish  the  will  and  enforce 
its  trusts,  when  its  validity  is  disputed  and  it  is  not  shown 
that  the  property  is  exposed  to  any  danger  by  remaining  in 
possession  of  defendants.1  But  as  between  an  heir-at-law 
in  possession  and  a  devisee  under  the  will  of  the  ancestor, 
which  is  being  contested  by  the  heir,  equity  may  interpose 
for  the  protection  of  the  devisee  in  a  strong  case,  by  grant- 
ing a  receiver  of  the  rents  and  proceeds,  when  the  court  is 
satisfied  that  the  heir  is  entirely  shut  out  from  inheriting 
by  the  terms  of  the  will.  But  such  a  state  of  facts  is  not 
to  be  regarded  as  affecting  the  right  of  an  heir  from  whom 
the  testator  has  not  taken  away  the  legal  estate.2  And 
when,  in  such  a  case,  the  heir-at-law  has  obtained  a  verdict 
against  the  will,  he  will  be  regarded  as  entitled  to  possession 
of  the  estate,  and  equity  will  refuse  to  disturb  his  possession 
"b}r  appointing  a  receiver  in  behalf  of  a  devisee  under  the 
will,  notwithstanding  a  new  trial  has  been  directed  in  the 
action  to  test  the  validity  of  the  will.3 

§  571.  "When  a  conveyance  of  real  estate  is  made  in 
trust  for  the  benefit  of  the  grantor's  wife  during  her  life, 
with  remainder  to  his  children  equally  to  receive  the  rents 
and  profits  for  life,  and  after  the  wife's  death  the  grantor 
takes  possession  and  appropriates  the  rents  and  profits  to 
his  own.  use,  no  sufficient  ground  is  presented  for  a  receiver, 
when  it  is  not  shown  that  the  person  alleged  to  be  in 
wrongful  possession  is  insolvent,  or  that  the  rents  and 
profits  are  in  danger  of  being  lost  to  the  heirs.4  JSTor  is  it 
sufficient  ground  for  appointing  a  receiver  over  the  estate 
of  a  deceased  person,  upon  a  bill  by  the  next  of  kin,  that 
the  defendants,  pretending  to  be  heirs  of  the  deceased,  are 
opposing  plaintiff's  application  for  letters  of  administra- 
tion, when  the  bill  states  no  grounds  of  opposition  on  the 
part  of  defendants,  and  nothing  appears  to  show  that 
plaintiff  may  not  in  due  course  obtain  the  administration. 

i  Clark  v.  Dew,  1  Russ.  &  M.,  103.        a  Lloyd  v.  Trimleston,  2  Mol.,  81. 
2Fingal  r.  Blake,  2  Mol.,  50.  <  Clark  r.  Ridgely,  1  Md.  Ch.,  70. 


CHAP.  XIV.]  REAL    PEOPERTY.  497 

A  demurrer,  therefore,  to  such  a  bill  for  want  of  equity  will 
be  sustained.1 

§  572.  Where  plaintiffs  were  entitled,  as  younger  children 
of  a  deceased  ancestor,  to  certain  portions  allowed  them  in 
the  settlement  of  his  estate,  raised  out  of  a  term  of  years, 
and  had  obtained  a  decree  for  a  sale  of  the  term  for  that 
purpose,  but  the  tenant  for  life  obstructed  the  enforcement 
of  the  decree,  a  receiver  of  the  rents  and  profits  was  al- 
lowed as  against  the  tenant  for  life.2  And  where  the  holder 
of  the  life  estate  rented  the  premises,  and,  after  her  death, 
the  tenant  continued  in  possession,  claiming  to  own  the 
premises  as  heir,  upon  a  bill  against  the  tenant  for  an  ac- 
counting and  payment  of  the  rents  accruing  after  the  death 
of  the  owner  of  the  life  estate,  and  for  a  receiver,  the  case 
was  regarded  as  an  appropriate  one  for  the  relief,  and  a 
reference  was  made  to  a  master  to  appoint  a  receiver.3 

§  573.  The  owner  of  land,  who  has  contracted  for  its 
sale,  and  executed  a  bond  for  title,  conditioned  upon  the 
payment  of  vendee's  notes  for  the  purchase  money,  can  not, 
on  the  ground  of  vendee's  insolvency  and  commission  of 
waste,  obtain  a  receiver  to  hold  the  property  pending  an 
action  to  rescind  the  contract;  since,  however  imprudent 
the  contract  of  sale  may  have  been,  the  vendor  can  not,  be- 
cause of  his  own  imprudence,  obtain  such  relief,  and  must 
be  left  to  pursue  his  remedy  at  law.4 

1  Jones  v.  Frost,  3  Madd.,  1st  lias  no  property,  and  so  known  to 
American  Edition,  9.  the  vendor,  on  the  ground  of  that 

2  Brigstocke  v.  Mansel,  3  Madd. ,  insolvency,  simply,  ask  for  the  ap- 
lst  American  Edition,  32.  pointment  of  a  receiver  who  shall 

3  Anonymous,  Amb.,  311,  note  1.     hold  the  property  until  a  decree 
■♦Jordan    v.  Beal,   51    Ga.,   602.     can  be  had  canceling  the  contract 

The  court,  Trippe,  J.,  say,  p.  601:  of    sale?      There    was    no    fraud 

'"All    questions    were    eliminated  charged.     The  charge  as  to  waste, 

from  the  case  at  the  hearing  by  the  etc.,  was  denied  by  the  answer  and 

answer  of  defendants  and  the  sup-  by  affidavits.     No    authority  was 

pletory  affidavits,   but  one.     That  referred  to  showing  that  such  a 

question  is,  can  the  vendee  of  lands,  remedy    exists,   and    we    can    see 

who  sells  and  gives  a  bond  for  title  much  danger  and  unlimited  trouble 

to  an  insolvent  vendor,  one  who  that  would  be  given  to  the  courts 
32 


498 


RECEIVERS. 


[chap.  XIV. 


§  574.  The  aid  of  equity  by  a  receiver  is  sometimes  ex- 
tended in  behalf  of  annuitants,  or  creditors  whose  demands 
are  an  annual  charge  upon  the  real  estate  of  their  debtor, 
the  effect  of  such  appointment  being  virtually  to  attach 
the  rents  due  from  tenants  of  the  premises  on  which  the 
annuity  is  charged.1  And  upon  a  bill  for  an  accounting  of 
arrears  of  an  annuity  charged  upon  defendant's  real  estate, 
equity  may  grant  a  receiver  in  limine,  to  take  charge  of 
the  rents  until  the  rights  of  the  parties  can  be  finally  ascer- 
tained, when  it  is  shown  that  the  annuity  is  in  arrears,  and 
the  premises  are  an  insufficient  security.2  So  when  an  an- 
nuity is  a  charge  upon  the  benefice  of  a  clergyman,  in 
the  nature  of  an  equitable  mortgage,  the  annuitant  is  en- 
titled to  a  receiver  of  the  income  from  the  benefice,  in 
preference  to  later  judgment  creditors.3  And  where  plaint- 
iff claimed  an  annuity  which  defendant  had  by  deed  charged 
upon  certain  of  his  property  by  name,  and  generally  upon 
all  other  of  his  property,  and  plaintiff,  upon  a  bill  to 
raise  the  arrears  of  his  annuity,  had  obtained  a  receiver 
over  a  portion  of  defendant's  premises,  the  value  of  which 


if  the  principle  contended  for  were 
a  correct  one.  The  owner  of  prop- 
erty thus  selling  it  does  so  with  his 
eyes  open.  He  takes  the  risk.  He 
reserves  the  title  as  security.  His 
Hen  is  higher  than  any  other.  A 
specifio  remedy  is  given  him  by 
statute :  Code,  sees.  3684,  3886.  No 
fraud  in  the  contract  is  practiced 
upon  him.  He  has  simply  made  an 
imprudent  bargain,  or  comes  to  the 
conclusion  he  has,  as  his  debtor, 
the  purchaser,  does  not  pay  him  at 
the  time  agreed  on,  and  then  asks 
a  court  of  equity  to  take  the  land 
at  once  out  of  the  possession  of  the 
purchaser  and  hold  it  for  him  until 
he  can  have  a  decree  to  set  aside 
the  whole  bargain,  and  then  to 
give  him  back  his  land.     If  this 


were  the  rule,  or  if  a  holding  were 
made,  as  is  invoked  by  complain- 
ants, under  the  facts  as  they  ap- 
peared at  the  hearing  before  the 
chancellor,  every  vendor  of  land 
who  makes  a  rash  or  imprudent 
sale  would  at  once  seek  the  rem- 
edy, and  there  would  be  a  harvest 
of  suits  for  relief  from  one's  own 
improvidence  or  error.  This  would 
work  a  greater  evil  than  is  the 
hardship  of  waiting  six  months  on 
a  suit  at  law  and  a  sale  as  provided 
by  law." 

*Hayden  v.  Shearman,  2  Ir.  Ch., 
N.  S.,  137;  Beamish  v.  Austen,  Ii. 
Rep.,  9  Eq.,  361. 

2 Kelly  v.  Butler,  1  Ir.  Eq.,  435. 

3Battersby  v.  Homan,  2  Ir.  Ch., 
N.  S.,  232. 


CHAP.  XIV.]  EEAL    TEOrERTY.  499 

was  insufficient  to  satisfy  the  annuity,  and  plaintiff  subse- 
quently discovered  other  property  belonging  to  defendant, 
the  receiver  was  extended  to  such  other  property.1  But,  in 
conformity  with  the  general  principle  denying  the  aid  of  a 
receiver  when  the  party  aggrieved  has  an  adequate  remedy 
at  law,  an  annuitant,  whose  annuity  is  a  charge  upon  real 
property,  will  not  be  allowed  a  receiver  because  his  annuity 
is  in  arrears,  if  he  has  the  power  of  distraining  upon  the 
land ;  since  the  remedy  by  distraint  is  ample,  and  equity 
will  not  grant  a  receiver  in  behalf  of  one  who  does  not 
need  such  aid.2  And  when  a  testator  has  by  his  will  charged 
an  annuity  upon  real  property,  a  court  of  equity  will  not, 
pending  a  controversy  as  to  the  validity  of  the  will,  ap- 
point a  receiver  in  behalf  of  the  annuitant,  while  there 
appear  to  be  prior  charges  and  incumbrances  upon  the  prop- 
erty, which,  in  the  event  of  the  will  being  declared  valid, 
must  be  first  paid  out  of  the  property.3  But  if  an  annuity 
charged  upon  real  property  is  in  arrears,  and  there  is  doubt 
as  to  the  remedy  at  law,  a  receiver  may  be  appointed,  the 
jurisdiction  in  equity,  in  such  cases,  being  regarded  as  con- 
current with  the  jurisdiction  at  law.4  And  upon  a  bill  by 
a  father  against  his  children  to  set  aside  conveyances  to  the 
latter,  upon  the  ground  that  they  were  fraudulently  ob- 
tained, and  that  defendants  had  refused  to  pay  the  father 
an  annuity1  charged  upon  the  premises  conveyed,  the  case 
was  regarded  as  a  proper  one  for  a  receiver,  unless  defend- 
ants would,  without  delay,  pay  the  amount  of  the  annuity.5 
§  575.  As  regards  the  appointment  of  receivers  in  aid  of 
actions  of  ejectment,  or  suits  for  the  recovery  of  real  prop- 
erty, there  is  some  apparent  conflict  in  the  decisions  of  the 
courts,  which  can  only  be  harmonized  by  keeping  in  view 

i  Lyne  v.  Lockwood,  2  Mol.,  498.  8D' Alton  v.  Trimleston,  2  Dr.  & 

But  in  this  case,  a  reference  was  or-  War.,  531. 

dered  to  a  master,  to  report  whether  *  Beamish  v.  Austen,  Ir.  Rep.,  9 

any  other  creditors  were  entitled  to  Eq.,  361. 

priority.  sprobasco  v.  Probasco,  30  N.  J. 

2  Sollory  v.  Leaver,  L.  R ,  9  Eq. ,  22.  Eq. ,  108. 


500  KECEIVEKS.  [CHAP.  XIT. 

the  general  principles  already  established  as  governing  ap- 
plications for  receivers  over  real  property  pendente  lite.  The 
better  doctrine  undoubtedly  is,  that  in  ordinary  actions  of 
ejectment,  or  suits  for  the  recovery  of  real  property  in  the 
nature  of  ejectment  at  common  law,  when  no  especial  equi- 
ties interfere  in  favor  of  plaintiff,  the  contest  being  merely 
as  to  the  legal  title  of  the  premises  in  dispute,  a  receiver  of 
the  rents  and  profits  will  not  usually  be  appointed  pen- 
dente lite.  Unless,  therefore,  some  equitable  grounds  are 
made  to  appear,  entitling  plaintiff  to  the  rents  and  profits  as 
such,  or  unless  it  is  shown  that  their  sequestration  is  essential 
to  his  protection,  equity  will  refuse  to  lend  its  aid  by  a  re- 
ceiver, since  the  interference  would,  in  effect,  amount  to  a 
complete  ouster  of  the  defendant,  by  taking  away  from  him 
the  subject-matter  of  the  litigation,  without  trial  or  judg- 
ment.1 And  in  such  case,  a  valid  legal  title  in  the  plaintiff 
is  not  of  itself  a  sufficient  ground  for  the  relief.2 

§  576.  Where,  however,  the  plaintiff,  in  an  action  for  the 
recovery  of  real  estate,  shows  an  apparently  good  title,  and, 
in  addition  thereto,  that  there  is  imminent  danger  of  loss  of 
rents  and  profits  because  of  the  mismanagement  and  insolv- 
ency of  defendant  in  possession,  a  different  case  is  presented, 
and  a  receiver  may  be  granted  for  the  better  preservation 
of  the  rents  and  profits  pendente  lite?  And  where,  pending 
his  action  of  ejectment,  plaintiff  files  a  bill  showing  a  good 

1  People  v.  Mayor  of  New  York,  real  property,  pending  an  action  of 

Supreme  Court,  General  Term,  10  ejectment,  under   the    statutes  of 

Ab.  Pr.,  Ill,  reversing  S.  C,  Su-  North  Carolina,  see  Kron  v.  Dennis, 

preme  Court,  Special  Term,  8  Ab.  90  N.  C,  327. 

Pr.,  7;  Thompson  v.  Sherrard,   35  2  People  v.  Mayor  of  New  York, 

Barb.,  593;  S.  C,  22  How.  Pr.,  155;  Supreme  Court,  General  Term,  10 

Corey  v.  Long,  12  Ab.  Pr.,  N.  S.,  Ab.  Pr.,  Ill,  reversing  S.  C,  Su- 

427 ;  Rollins  v.  Henry,  77  N.  C,  467 ;  preme  Court,  Special  Term,  8  Ab. 

Mapes  v.  Scott,  4  Bradw.,  268.   And  Pr.,  7. 

see  to  the  same  effect,  under  the  3  Payne  v.   Atterbury,   Hairing, 

code  of  civil  procedure  in  Calif  or-  (Mich.),  414;  Ireland  v.  Nichols,  37 

nia,  Batemanv.  Superior  Court,  54  How.  Pr.,  222;  S.  C,  1   Sweeney, 

Cal.,  285.    As  to  the  right  to  a  re-  208.    See,  also,  Rogers  v.  Marshall, 

ceiver  of  the  rents  and  profits  of  6  Ab.  Pr.,  N.  S.,  457. 


CHAP.  XIV.]  REAL   PROPERTY.  501 

legal  title  to  the  premises,  which  is  not  successfully  contro- 
verted by  the  answer,  and  it  is  shown  that  plaintiff  is  in 
great  danger  of  losing  the  rents  and  profits,  by  reason  of  de- 
fendant's negligent  and  wasteful  management,  and  that  the 
property  is  depreciating  in  value  and  not  paying  interest  on 
its  incumbrances,  because  of  the  bad  management  of  defend- 
ant, who  is  himself  in  insolvent  circumstances,  a  fitting  case 
is  presented  for  the  aid  of  equity  by  a  receiver.  In  such  a 
case,  defendant  being  regarded  as  holding  over  as  against 
his  own  deed,  and  not  being  responsible  for  mesne  profits  or 
permissive  waste,  by  reason  of  his  insolvency,  the  aid  of 
equity  is  necessary  to  protect  the  holder  of  the  legal  title.1 
And  in  an  equitable  action  to  recover  real  estate,  upon  the 
ground  that  the  proceedings  by  which  plaintiff's  ancestor  had 
been  divested  of  the  title  were  void  for  fraud,  mistake,  and 
want  of  jurisdiction  in  the  court  in  which  the  proceedings 
were  had,  an  injunction  and  a  receiver  have  been  allowed 
when  it  was  shown  that  defendants  in  possession  were  irre- 
sponsible and  wrere  collecting  the  rents,  and  that  the  prem- 
ises were  in  a  ruinous  condition  and  would  continue  to 
deteriorate  if  left  to  defendant's  possession  pending  the  liti- 
gation, such  a  case  being  distinguished  from  an  ordinary 
action  of  ejectment.2  But  the  appointment  of  a  receiver,  in 
an  action  to  recover  possession  of  real  property,  is  not  re- 
garded as  a  special  proceeding  or  an  independent  action  in 
itself,  but  rather  as  a  part  of  the  original  action  and  auxil- 
iary thereto,  having  no  independent  existence  of  its  own.3 

§  577.  After  plaintiff,  in  an  action  for  the  recovery  of 
lands,  has  recovered  a  verdict  and  judgment  in  his  favor,  his 
rig] it  to  a  receiver  of  the  rents  and  profits  would  seem  to 
be  based  upon  stronger  grounds,  and  there  are  frequent 
cases  where  the  relief  has  been  extended  under  such  circum- 
stances, when  necessary  to  preserve  the  rents  and  proceeds 

1  Payne  v.  Atterbury,  Harring.  3  Whitney  v.  Buckman,  26  Cal., 
(Mich.),  414.  447. 

2  Rogers  v.  Marshall,  6  Ab.  Pr., 
N.  S.(  457. 


502  KECEIVEKS.  [CHAP.  XIV. 

from  loss.1  Thus,  in  an  action  to  recover  possession  of  lands 
on  which,  are  located  valuable  mineral  springs,  the  chief 
value  of  the  land  consisting  in  the  proceeds  derived  from 
sales  of  these  waters,  after  verdict  and  judgment  for  plaint- 
iff, and  pending  a  motion  for  a  new  trial,  it  is  proper  to 
appoint  a  receiver  upon  satisfying  the  court  that  the  relief 
is  necessary  to  protect  the  plaintiff's  rights  in  the  property, 
and  that  defendant  is  wasting  the  waters  and  otherwise  im- 
pairing the  value  of  plaintiff's  interest  therein,  and  that  he 
is  insolvent  and  unable  to  respond  to  a  judgment  in  dam- 
ages.2 And  when  defendants  are  in  possession  of  land, 
under  a  contract  for  its  purchase  made  with  plaintiff's  in- 
testate, but  fail  to  make  the  necessary  payments,  and  plaint- 
iff brings  his  action  and  recovers  judgment  for  the  return  of 
the  land  upon  payment  of  a  specified  sum,  upon  a  bill  by 
plaintiff  for  an  accounting  of  the  rents  and  profits  of  the 
land  during  defendants'  occupancy,  the  bill  alleging  that  de- 
fendants are  insolvent,  a  receiver  may  be  appointed  until 
the  determination  of  the  questions  involved.3  So  where 
plaintiff  in  ejectment  recovers  judgment  in  a  state  court, 
and  defendant  obtains  a  writ  of  certiorari  to  remove  the 
proceedings  to  the  United  States  court,  and  the  state  court, 
to  prevent  a  conflict  of  jurisdiction,  suspends  execution  of 
the  judgment  in  ejectment,  plaintiff  is  entitled  to  a  receiver 
of  the  rents  and  profits,  upon  a  bill  against  the  administra- 
tors of  the  defendant  in  ejectment,  alleging  that  they  are 
receiving  the  rents  and  profits ;  that  the  property  is  depre- 
ciating in  value ;  that  there  is  no  judge  of  the  United  States 
court  in  office,  and  that  the  proceedings  in  certiorari  are 
merely  a  pretense  to  maintain  a  harassing  litigation  for  the 
purpose  of  keeping  possession  of  the  premises  and  enjoying 
the  rents.  Such  a  state  of  facts  presents  a  case  requiring 
that  the  rents  and  profits  shall  be  held  by  some  indifferent 
person,  under  security,  until  the  title  can  be  determined  and 

•Frisbee    v.   Tinianus,    12    Fla.,        2  Whitney  v.  Buckrnan,  26  Cal., 
300;  Collier  v.   Sapp,   49  Ga.,  93;    447. 
Whitney  v.  Buckman,  26  Cal.,  447.        3  Collier  v.  Sapp,  49  Ga.,  93. 


CHAP.  XIV.]  EEAL    PROPERTY.  503 

the  rights  of  the  respective  parties  adjusted.  And  the  case 
is  regarded  as  falling  within  that  class  of  cases  in  which  a 
court  of  equity  will  interpose  for  the  protection  of  parties 
when  no  adequate  remedy  exists  at  law.1 

§  578.  The  jurisdiction  of  equity  by  the  appointment  of 
receivers  of  the  rents  and  profits  accruing  from  real  prop- 
erty is  not  confined  to  cases  where  the  estate  or  interest 
sought  to  be  protected  is  the  fee  simple,  bat  extends  also  to 
leasehold  interests,  over  which  a  receiver  may  be  granted 
in  proper  cases.  And  when  a  leasehold  interest  in  lands  is 
conveyed  to  a  trustee  in  trust  to  secure  an  indebtedness  due 
to  creditors  of  the  lessee  or  assignor,  but  such  trustee  de- 
clines to  undertake  the  performance  of  the  trust,  a  receiver 
may  be  appointed  in  behalf  of  the  creditors  to  carry  into 
execution  the  trusts  of  the  deed  under  the  direction  of  the 
court.2  And  a  receiver  may  be  appointed,  before  answer, 
over  a  leasehold  interest  of  a  minor,  when  there  is  danger  of 
eviction  for  non-payment  of  rents  due  to  the  landlord,  and 
when  it  is  manifestly  for  the  minor's  benefit  that  the  relief 
shall  be  granted.3  So  where  one  has  advanced  money,  with 
the  consent  of  the  owner  of  a  leasehold,  to  redeem  the  lands 
from  eviction  under  a  judgment,  he  acquires  an  equitable 
lien,  and  may  have  a  receiver  for  its  protection  when  there 
is  danger  of  eviction  by  the  landlord  for  non-payment  of 
rent  due.4  And  on  a  bill  against  tenant  for  life,  to  restrain 
the  disposal  of  the  property  and  to  keep  down  assessments 
and  taxes  thereon,  it  is  proper  for  the  court,  on  being  satis- 
fied that  the  tenant  for  life  in  possession  has  permitted  the 
taxes  to  be  in  arrears,  to  appoint  a  temporary  receiver  of  as 
much  of  the  rents  and  income  as  may  be  necessary  to  pay 
off  the  taxes  due  and  in  arrear,  unless  defendant  shall  within 
a  specified  time  pay  such  taxes.5 

IFrisbeev.  Tiinanus,  12Fla.,300.        <Fetherstone  v.   Mitchell,   9  Ir. 

2  Taylor  v.  Emerson,  6  Ir.  Eq.,     Eq.,  480. 

224.  s  Cairns  v.  Chabert,  3  Edw.  Cb., 

3  Whitelaw  v.  Sandys,  12  Ir.  Eq.,     312. 
393. 


504  RECEIVERS.  [ciiAr.  XIV. 

§  579.  Notwithstanding  the  aid  of  a  receiver  is  thus 
freely  granted  for  the  preservation  of  leasehold  interests,  in 
proper  cases,  an  assignee  of  the  lease  is  not  entitled  to  a  re- 
ceiver, although  entitled  to  the  rents  accruing  from  the 
demised  premises,  since  he  acquires  no  hen  by  virtue  of  the 
assignment,  and  has  no  interest  or  title  in  the  land  sufficient 
to  warrant  the  aid  of  equity.  Nor  is  the  right  of  such  an 
assignee  to  have  a  receiver  strengthened  by  the  fact  that  he 
also  claims  to  be  the  owner  of  the  estate  in  remainder,  since 
no  legal  or  equitable  claim  to  have  the  rents  sequestered  and 
put  into  the  hands  of  a  receiver  can  arise  from  an  accidental 
union  of  the  ownership  of  the  term  for  years  and  the  estate 
in  remainder  in  the  same  person.1 

§  5 SO.  When  the  litigation  concerns  the  title  to  a  chattel 
real,  as  in  the  case  of  a  house  standing  upon  leased  ground, 
it  is  not  sufficient  cause  for  putting  the  property  into  the 
hands  of  a  receiver,  that  the  defendants,  who  are  in  posses- 
sion under  claim  of  title,  are  alleged  to  be  insolvent,  and 
that  they  have  suffered  the  ground  rent  to  fall  greatly  in 
arrear.2 

§  581.  "When  a  receiver  has  been  appointed  over  a  lease- 
hold interest  in  lands,  on  the  expiration  of  the  term  for 
which  the  lands  were  demised  the  landlord  is  at  liberty  to 
re-enter  into  possession  without  obtaining  leave  of  court  for 
that  purpose.3  But  when,  in  such  a  case,  a  motion  is  made 
to  discharge  the  receiver  as  to  that  portion  of  the  premises 

1  Huerstel  v.  Lorillard,  7  Rob.  (N.  reluctance.  It  must  not  only  be 
Y.),  251,  affirming  S.  C,  6  Rob.  (N.  morally  sure  tbat  at  tbe  bearing  tbe 
Y.),  260.  party  would    upon  tbose  circuni- 

2  Kipp  v.  Hanna,  2  Bland,  2G.  stances  be  turned  out  of  possession, 
Bland,  Chancellor,  says,  p.  31 :  "A  but  must  see  some  imminent  dan- 
receiver  may  be  appointed  against  ger  to  the  property  and  the  inter- 
the  legal  title  in  a  strong  case  of  mediate  rents  and  profits,  from  not 
fraud,  combined  with  danger  to  acting  rather  prematurely,  and  if 
the  property.  In  such  case,  the  the  property  should  not  be  taken 
court  may,  on  affidavits,  interfere  under  the  care  of  the  court." 
before  the  hearing.  But  the  court  3  Britton  v.  M'Donnell,  5  Ir.  Eq., 
interposes    by    appointing     a    re-  27a. 

ceiver  against  the  legal  title  with 


CHAP.  XIV.]  REAL    PROPERTY.  505 

the  lease  of  which  has  expired,  defendant  in  the  action 
should  be  served  with  notice  of  such  motion.1 

§  5S2.  A  court  of  equity  will  not,  ordinarily,  appoint 
different  receivers  over  the  same  real  estate,  the  proper  course 
being,  where  one  is  already  appointed  and  subsequent  ap- 
plications are  made  for  a  receiver  over  the  same  estate,  to 
extend  the  former  receiver  to  the  subsequent  applications. 
And  on  being  so  extended,  he  will  be  required  to  give  ad- 
ditional security,  or,  in  default  thereof,  he  will  be  removed 
and  another  appointment  made.2  And  when  different  re- 
ceivers have  been  appointed,  on  the  application  of  different 
creditors,  over  the  same  estate  and  property  of  defendant, 
the  hardship  and  expense  of  such  a  state  of  facts,  as  against 
the  owner  of  the  estate,  are  sufficient  grounds  to  warrant 
the  court  in  removing  all  the  receivers  but  one,  and  extend- 
ing him  over  the  entire  estate.3  But,  while  a  receiver  over 
real  property,  appointed  for  the  protection  of  creditors,  is 
frequently  extended  in  aid  of  other  creditors,  this  will  not 
be  done  before  answer  merely  upon  consent  of  defendant, 
when  the  effect  of  thus  extending  the  receiver  would  be  to 
prejudice  rights  of  the  creditors  first  obtaining  a  receiver  of 
the  rents  of  the  premises.4 

§  583.  When  a  receiver  over  the  real  property  of  a  de- 
fendant debtor  is  thus  extended,  for  the  benefit  of  other 
parties  claiming  an  interest  in  the  debtor's  estate,  the  exten- 
sion, as  regards  the  parties  on  whose  application  it  is  made, 
is  deemed  a  new  appointment,  and  rents  received  before  the 
extending  order  are  for  the  benefit  of  those  only  who  are  en- 
titled to  relief  in  the  proceeding  in  which  the  receiver  was 
acting  when  such  rents  came  to  his  hands.  The  extending 
order,  therefore,  attaches  only  the  rents  thereafter  received, 
for  the  benefit  of  parties  obtaining  relief  in  the  proceeding 
to  which  the  receiver  is  extended.5 

1  Johnston  v.  Henderson,  8  Ir.  5  Agra  &  Masterman's  Bank  v. 
Eq.,  521.  Barry,  Ir.  Rep.,  3   Eq.,  443;   La- 

2  Wise  v.  Ashe,  1  Ir.  Eq.,  210.  nauze    t».    Belfast,    Holy  wood     & 
» Kelly  v.  Rutledge,  8  Ir.  Eq.,  228.    Bangor  R.  Co.,  id.,  454. 

4  Brown  v.  Nolan,  10  Ir.  Eq.,  57. 


50G 


RECEIVERS. 


[CHAP.  XIV. 


§  58-1.  When  real  estate  has  been  conveyed  to  trustees, 
to  hold  and  manage  and  receive  the  rents  for  the  benefit  of 
the  cestui  que  trust,  a  child  of  the  grantor,  if  disputes  and 
dissensions  arise  among  the  trustees  as  to  the  management 
of  the  property,  in  consequence  of  which  the  rents  are  not 
collected,  the  cestui  que  trust  is  entitled  to  a  receiver  to 
secure  the  recovery  of  arrears  of  rent  due,  and  the  punctual 
payment  of  the  accruing  rents.1  But  where  plaintiff  seeks 
the  appointment  of  a  receiver  over  property  in  the  hands 
of  defendants,  alleging  that  they  hold  it  in  trust  for  him,  a 
denial  of  the  trust  does  not  of  itself  render  it  necessary  to 
appoint  a  receiver  on  the  establishment  of  the  trust.  Under 
such  circumstances,  if  no  ground  of  apprehension  is  shown 
that  loss  may  occur  by  permitting  the  property  to  remain 
in  its  appropriate  use  in  the  occupancy  of  defendant,  and 
his  ability  to  respond  for  its  use  is  admitted,  and  he  has 
already  been  ordered  by  the  court  to  account  for  the  rents 
and  profits  that  he  may  have  received,  a  receiver  will  be 
refused.2 

§  585.  Eeceivers  are  sometimes  granted  over  real  prop- 
erty for  the  protection  of  equitable  incumbrancers,  or  cred- 
itors whose  demands  are  a  charge  upon  the  property,  when 
the  aid  of  equity  is  necessary  for  the  protection  of  their 
rights.  And  where  plaintiff  in  an  action  to  raise  the  ar- 
rears of  a  rent-charge,  due  him  out  of  defendant's  real 
estate,  obtains  a  decree  for  a  sale  of  the  property,  but  de- 
fendant obstructs  the  decree,  and  does  not  comply  with  the 
requirement  of  court  to  produce  his  deeds,  thus  preventing 
a  sale  of  the  property,  a  receiver  may  be  allowed.3  So  it 
would  seem,  where  a  person  takes  a  conveyance  of  a  legal 
estate,  subject  to  certain  prior  equitable  interests  consisting 
of  rent-charges  thereon,  if  he  refuses  to  satisfy  such  claims, 
that  a  receiver  may  be  appointed  upon  application  of  the 
person  entitled  to  the  rent-charges.4    And  when  a  receiver 


i  Wilson  v.  Wilson,  2  Keen,  249. 

-  Hamburgh  Manufacturing  Co. 
v.  Edsall,  3  Halst.  Ch.,  298;  S.  C, 
4  Halst.  Ch.,  141. 


3Shee  v.  Harris,  1  Jo.  &  Lat., 
91. 

4Pritchard  v.  Fleetwood,  1 
Meriv.,  54. 


CHAP.  XIV.]  REAL   PROPERTY.  507 

is  sought  of  the  rents  and  profits  of  real  property,  by  an 
equitable  creditor  or  incumbrancer,  having  a  charge  upon 
the  property,  but  having  no  right  of  entry  or  possession,  if 
the  court  is  satisfied  in  the  preliminary  stage  of  the  cause 
that  the  relief  sought  by  the  bill  will  be  given  when  the 
final  decree  is  pronounced,  it  will  not  expose  parties  claiming 
such  relief  to  the  danger  of  losing  the  rents  by  not  appoint- 
ing a  receiver.  But  when,  in  such  case,  the  amount  due 
plaintiff  from  defendant  is  tendered  and  accepted,  the  re- 
ceiver previously  appointed  will  be  discharged.1 

§  586.  In  New  York,  it  is  held  that  the  plaintiff  in  an 
action  for  the  foreclosure  of  a  mechanic's  lien,  under  the 
laws  of  the  state,  is  not  entitled  to  a  receiver  of  the  rents 
and  profits  of  the  property  pendente  lite,  even  though  it  is 
alleged  that  the  owner  of  the  premises  is  insolvent  and  is 
collecting  the  rents,  and  that  there  are  prior  incumbrances 
on  the  property,  the  interest  on  which  the  owner  neglects 
to  pay.2 

§  587.  A  special  receivership,  for  the  purpose  of  col- 
lecting rents  accruing  out  of  real  estate,  is  sometimes  nec- 
essary in  aid  of  proceedings  in  bankruptcy.  And  although 
the  courts  seem  to  be  averse  to  appointing  receivers  in  such 
proceedings,  yet  if  it  is  manifest  that  the  apparent  titles  to 
property,  in  which  the  bankrupt  estate  is  interested,  are  on 
their  face  such  that  the  rents  can  not,  under  the  usual  war- 
rant in  bankruptcy,  be  efficiently  and  successfully  collected, 
a  receiver  will  be  allowed.3  And  a  circuit  court  of  the 
United  States,  upon  a  bill  for  that  purpose  by  the  assignee 
in  bankruptcy,  will  appoint  a  receiver  to  take  charge  of 
real  estate  owned  by  the  bankrupt  to  which  there  are  con- 

1  Davis  v.  Duke  of  Marlborough,  might  be  granted  in  sucb  an  net  i<  >n, 
2  Swans.,  138.  but  that  if  plaintiff  had  instituted 

2  Meyer  v.  Seebald,  11  Ab.  Pr.,  another  action  to  recover  the  same 
N.  S.,  326,  note.  But  see,  contra,  indebtedness,  he  would  be  allowed 
Webb  v.  Van  Zandt,  16  Ab.  Pr.,  a  receiver  only  on  condition  of  dis- 
314,  note,  which  was  a  case  in  the  continuing  such  other  action. 
New  York  Common  Pleas,  holding  s  Keenan  v.  Shannon,  9  Bank, 
that  an  injunction  and  a  receiver  Reg.,  441. 


508  RECEIVERS.  [CHAP.  XIV. 

flicting  claims  and  liens,  which  are  before  the  court  for 
adjustment,  such  a  case  being  regarded  as  an  eminently 
proper  one  for  a  receiver  to  take  charge  of  the  property, 
until  the  validity  of  the  liens  may  be  determined,  in  order 
that  the  interests  of  all  creditors  may  be  properly  secured.1 
And  in  England,  the  assignee  of  an  insolvent  debtor,  who 
is  prevented  from  recovering  an  estate  OAvned  by  and  in 
possession  of  the  debtor  by  reason  of  former  proceedings 
in  bankruptcy  against  him,  may  maintain  a  bill  in  chancery 
to  recover  the  property,  upon  which  he  may  procure  a  re- 
ceiver of  the  rents  pendente  lite? 

§  5S8.  When  the  purpose  of  the  litigation  is  to  apply 
certain  trust  property  in  payment  of  an  indebtedness  secured 
by  deed  of  trust  upon  the  property,  and  there  are  conflict- 
ing claims  to  be  satisfied,  which  are  of  equal  justice  and 
merit  in  themselves,  so  that  the  question  presented  is  as  to 
who  is  entitled  to  prior  satisfaction  in  the  event  of  the  prop- 
erty proving  insufficient  for  all,  a  proper  case  is  presented 
to  warrant  a  receiver  for  the  management  of  the  property.3 

§  589.  "With  regard  to  the  nature  or  extent  of  a  defend- 
ant's interest  in  realt}^  necessary  to  warrant  a  court  of 
equity  in  appointing  a  receiver  thereof,  at  the  suit  of  an 
incumbrancer,  it  is  held  in  England,  that  where  defendant's 
right  or  estate  is  such  that  his  creditors  may  have  execution 
against  it  by  writs  of  elegit,  a  sufficient  interest  is  shown  to 
justify  the  appointment  of  a  receiver.4  And,  under  the 
former  practice  in  England,  receivers  were  allowed  over  the 
benefice  of  a  clergyman  of  the  established  church,  when  he 
had  made  the  debt  on  which  the  proceedings  were  instituted 
a  charge  upon  his  benefice.5 

§  590.  As  regards  the  right  to  a  receiver  of  crops  grown 
upon  leased  premises,  it  is  held  that  a  mere  contract  between 

1  McLean  v.   Lafayette  Baiik,  3  4  Davis  v.  Duke  of  Marlborough, 

McLean,  503.  1  Swans..  74. 

2Hollis  v.  Bryant,  12  Sim.,  492.  5 White  v.  Bishop  of    Peterbor- 

3  Hamberlain  v.  Marble,  24  Miss.,  ough,    3    Swans.,    109;    Silver    r. 

586.  Bishop  of  Norwich,  id.,  112,  note. 


CHAP.  XIV.]  REAL    PROPERTY.  509 

the  owner  of  land  and  a  tenant,  providing  for  the  working 
of  the  land  by  the  tenant  for  a  specified  time,  and  compen- 
sation to  be  paid  the  owner  out  of  the  crops  raised  thereon, 
does  not  give  the  owner  such  equities  as  to  entitle  him  to  an 
injunction  against  the  removal  of  the  crops  by  the  tenant, 
or  a  receiver  to  manage  the  land  and  take  possession  of  the 
ungathered  crop.1  But  when  the  litigation  concerns  the 
title  to  land,  which  is  claimed  by  both  parties,  both  also 
claiming  to  be  in  possession,  and  when  they  are  interfering 
with  each  other  in  harvesting  the  crops  grown  by  each  re- 
spectively and  threatening  each  other  with  assaults  and 
with  forcible  resistance,  an  appropriate  case  is  presented  for 
a  receiver  until  the  rights  of  the  parties  can  be  finally  de- 
termined.2 

§  591.  "When,  upon  her  marriage,  certain  moneys  are 
settled  upon  a  wife  for  her  separate  use  and  benefit,  being 
vested  in  trustees  for  that  purpose,  to  be  by  them  invested 
in  securities,  and  the  husband  afterward  induces  the 
trustees,  in  violation  of  their  trust,  to  invest  the  money  in 
realty,  upon  which  he  expends  money  in  improvements  and 
repairs,  the  husband  will  not  be  allowed  a  receiver  of  the 
rents  and  profits  on  a  bill  filed  by  him  against  the  wife  and 
the  trustees,  to  reimburse  him  for  his  outlay.3  And  when 
plaintiff's  rights  were  under  a  marriage  settlement,  whereby 
he  claimed  his  wife's  fortune  to  be  a  charge  upon  the  fee  of 
defendant's  estate,  and  defendant  had  neglected  to  pay  the 
interest  due,  it  was  held  not  to  be  such  a  case  as  to  justify 
a  receiver;  since,  if  plaintiff  should  establish  at  the  hearing 
that  his  claim  was  a  charge  upon  the  fee,  he  would  be 
entitled  to  sell  the  inheritance,  and  the  fund  not  being 
shown  to  be  insufficient,  the  court  refused  to  interfere  in 
limine}  But  when  husband  and  wife  entered  into  an  agree- 
ment that  they  should  mutually  enjoy  and  share  certain  real 
estate,  and  the  wife  afterward  procured  a  divorce  from  the 

1  Williams  v.  Green,  37  Ga.,  37.  3  Wiles  v.  Cooper,  9  Beav.,  294. 

2Hlawacek  v.  Bolmian,  51  Wis.,  *  Drought  v.  Percival,  2  MoL, 
92.  502. 


510 


RECEIVEKS. 


[chap.  XIV. 


husband,  upon  a  bill  by  her  alleging  that  the  husband  was 
in  the  sole  occupancy  of  the  property  and  enjoying  all  the 
rents,  and  that  he  was  insolvent  and  unable  to  respond  in 
damages,  a  receiver  was  granted,  and  was  directed  to  pay 
half  the  rents  to  the  husband  and  to  retain  the  other  half 
to  await  the  final  decree.1 

§  592.  It  has  already  been  shown  that  a  defendant's  pos- 
session of  real  property,  under  claim  of  title,  will  not  be 
disturbed  by  a  receiver  when  adequate  relief  may  be  had 
in  the  usual  forms  of  procedure  at  law.  And  the  mere 
fact  of  difficulties  existing  in  the  way  of  enforcing  the  ordi- 
nary legal  remedies  to  compel  payment  of  rent  due  upon 
premises  demised  is  not,  of  itself,  sufficient  to  give  a  court 
of  equity  jurisdiction  to  appoint  a  receiver,  when  those 
remedies  are  still  open  to  the  party  aggrieved.2 

§  593.  It  is  in  all  cases  essential  that  a  plaintiff,  seeking 
the  aid  of  a  receiver  over  real  property,  should  use  due  dili- 
gence in  the  assertion  of  his  rights,  since  long  acquiescence 
in  defendant's  possession  may  suffice  to  bar  him  from  the 
relief  to  which  he  might  otherwise  be  entitled.  And  when 
a  shareholder  in  a  corporation  seeks  a  receiver  over  real 
property  held  by  a  defendant,  alleging  it  to  be  the  property 
of  the  corporation,  but  plaintiff  has  acquiesced  in  defend- 
ant's possession  and  use  of  the  property  for  a  number  of 
years  without  question  or  remonstrance,  and  shows  no 
danger  on  the  ground  of  defendant's  responsibility,  he  will 
not  be  allowed  a  receiver.  And  when,  in  such  a  case,  it 
appears  that  the  property  over  which  a  receiver  is  sought 
was  accumulated  through  fraud  on  the  part  of  the  corporate 
authorities,  of  which  plaintiff,  as  a  shareholder,  was  fully 
cognizant,  and  in  which  he  had  acquiesced  without  com- 
plaint for  several  years,  his  application  is  properly  refused.3 

xBaggs  v.  Baggs,  55  Ga.,  590.  As        2Cremen  v.  Hawkes,  8  Ir.  Eq., 
to  the  circumstances  under  which    153,  affirmed  on  appeal,  id.,  503. 
a  receiver  may  be    allowed  over 
property  of  the  husband  in  a  pro- 
ceeding for  alimony,  see  Holmes  v. 
Holmes,  29  N.  J.  Eq.,  9. 


3  Hager  v.  Stevens,  2  Halst.  Ch., 
374. 


CHAP.  XIV.]  REAL   TROPEKTY.  511 

§  594.  A  receiver  may  be  appointed  of  the  rents  and 
profits  of  real  estate  which  is  found  to  have  escheated  to 
the  state,  upon  a  proceeding  instituted  by  the  state  for  that 
purpose,  when  it  is  shown  that  the  relief  is  necessary  for 
the  purpose  of  collecting  the  rents  forthwith,  which  would 
otherwise  be  lost.1 

§  595.  It  would  seem  to  be  proper,  on  an  application  for 
a  receiver  over  real  property,  when  the  defendant,  against 
whose  possession  the  receiver  is  sought,  consents  to  pay  the 
rents  and  profits  into  court,  to  refuse  the  application  for  a 
receiver.2 

§  596.  One  who  is  not  a  party  to  the  action,  although 
claiming  certain  lands  which  are  subject  to  the  receivership, 
can  not  be  heard  to  show  cause  against  making  a  conditional 
order  for  the  receiver  absolute,  his  proper  method  of  redress 
being  by  application  to  the  court  to  remove  the  receiver  as 
to  such  lands  as  he  claims.3  And  a  motion  by  a  remainder- 
man and  by  tenants  of  premises,  which  had  been  placed  in 
the  hands  of  a  receiver,  to  restrain  him  from  turning  them 
out  of  possession,  was  refused  on  the  ground  that  their 
interest  was  insufficient  to  sustain  the  application.4 

§  597.  When  a  receiver  is  appointed  over  real  property 
in  the  possession  of  the  owner,  the  proper  course  is  to  make 
application  to  the  court  for  an  order  directing  the  owner  to 
surrender  possession  to  the  receiver,  since  the  latter  can  not 
distrain  upon  the  owner  in  possession,  who  is  not  a  tenant 
of  the  receiver.  If,  therefore,  a  loss  occurs  by  reason  of 
the  receiver  allowing  the  owner  to  remain  in  possession,  it 
will  be  regarded  as  the  fault  of  the  parties  in  interest  in 
the  cause  in  not  applying  for  an  order  upon  the  owner  to 
deliver  up  possession.5 

§  598.  A  receiver  of  the  rents  of  real  property  may  be 
appointed  upon  bill  and  affidavits  in  support  thereof,  before 

1  People  v.  Norton,  1  Paige,  17.  *  Wynne  v.  Lord  Newborough,  1 

-Prebble  v.  Boghurst,  1  Swans.,  Ves.  Jun.,  164. 

309.  s  Griffith  v.  Griffith,  2  Ves.,  400. 
3  Creed  v.  Moore,  4  Ir.  Eq.,  684. 


512  RECEIVERS.  [CHAT.  XIV. 

answer,  in  a  case  of  emergency  requiring  the  immediate  in- 
terference of  the  court  for  the  protection  of  plaintiff's  equi- 
ties.1 But  the  appointment  will  not  be  made  when  the 
person  in  possession  is  not  a  party  to  the  cause  and  not  before 
the  court.2 

§  599.  As  regards  the  effect  of  the  appointment  of  a  re- 
ceiver over  a  corporation  upon  the  title  to  its  real  estate,  it 
would  seem  that  when  the  appointment  is  merely  pendente 
lite,  and  no  assignment  is  executed  by  the  corporate  body 
to  the  receiver,  the  title  is  not  divested,  the  proceedings 
being  regarded  as  inchoate,  and  the  right  of  the  receiver 
as  only  a  possessory  right  for  the  purposes  of  the  suit.3 
Where,  however,  a  receiver  is  appointed  upon  the  dissolu- 
tion of  a  corporation,  it  is  held  that  the  title  to  its  realty 
vests  in  the  receiver,  for  the  benefit  of  creditors  and  share- 
holders.4 

§  600.  It  is  important  that  the  order  appointing  a  re- 
ceiver over  real  property  should  state  distinctly  and  clearly 
the  particular  property  over  which  he  is  appointed.  And 
when  it  is  so  indefinite  in  this  respect  that  it  does  not  ap- 
pear what  property  is  subject  to  the  receiver's  control,  the 
court  will  not  enjoin  the  real  owner  from  interfering  with 
the  property  or  collecting  its  rents.5  But  cases  are  some- 
times met  with  in  the  books,  where  a  receiver  has  been 
appointed  over  a  portion  of  the  real  estate  in  controversy, 
and  not  over  the  whole.6 

§  601.  When  a  receiver  is  appointed  to  take  charge  of 
the  proceeds  arising  from  real  estate,  pending  litigation 
concerning  the  right  thereto,  and  judgment  is  finally  ren- 
dered for  plaintiff,  he  is  entitled  to  an  order  of  court  direct- 
ing the  receiver  to  deliver  the  funds  into  his  possession. 
And  upon  an  application  for  such  order,  the  court  will  not 

iWoodyatt  v.  Gresley,  8  Sim.,  3  Montgomery  v.  Merrill,  18 Mick., 
ISO.  338. 

2  Mays  v.  Wherry,  3  Term.  Cli.,        «Owen  v.  Smith,  31  Barb.,  641. 
34.  5  Crow  v.  Wood,  13  Beav.,  271. 

6  Calvert  v.  Adams,  Dick.,  478. 


CHAP.  XIV.]  REAL   PE0PEETY.  513 

presume  that  the  receiver  transcended  his  authority,  and 
will  not  grant  a  reference  to  a  jury  or  referee,  to  determine 
how  much  of  the  fund  rightfully  belongs  to  plaintiff,  or  to 
ascertain  who  is  entitled  to  the  money  in  the  receiver's 
hands.1 

§  002.  Since  the  right  of  a  receiver  can  not  outlast  the 
action  in  which  he  was  appointed,  nor  be  used  for  any  pur- 
pose not  justified  thereby,  it  is  held  that,  upon  the  termina- 
tion of  the  receiver's  functions,  when  no  assignment  was 
made  of  his  real  estate  by  the  defendant  to  the  receiver, 
the  real  estate  is  subject  to  the  lien  of  a  judgment  and 
execution  against  the  defendant  to  the  same  extent  as  if 
there  had  been  no  receivership.2 

§  602  a.  The  power  of  a  court  of  equity  to  take  posses- 
sion, through  a  receiver,  of  property  which  is  liable  to  waste 
and  irremediable  loss,  if  suffered  to  remain  in  the  posses- 
sion of  a  defendant  pending  a  litigation  as  to  its  title,  may 
also  be  exercised  against  a  plaintiff  who  has  taken  posses- 
sion from  defendant  and  whose  possession  threatens  similar 
injury  to  the  property.  And  when  plaintiff,  suing  in  forma 
pauperis  for  the  recovery  of  land,  during  the  pendency  of 
the  action  takes  possession  of  a  portion  of  the  premises  and 
resists  their  reoccupation  by  defendants  claiming  title 
thereto,  a  receiver  may  be  had  upon  the  application  of  de- 
fendants to  take  possession  of  the  usurped  premises  and  to 
secure  their  rents  until  the  determination  of  the  cause.' 

1  Whitney  v.  Buckman,  26  Cal.,        2  Montgomery  r.  Merrill,  18  Mich., 
447.  338. 

SHorton  v.  White,  84  N.  C,  297. 
33 


514  RECEIVERS.  [CHAP.  XIV. 


II.  Receivers  as  Between  Tenants  in  Common. 

§  603.     Courts  averse  to  interfering  as  between  tenants  in  common. 

604.  Exclusion  of  co-tenants  by  insolvent  tenant  in  possession,  ground 

for  relief. 

605.  When  receiver  allowed  over  part  of  joint  property ;  injunction 

allowed ;  receiver  in  default  of  security  by  defendant. 

606.  Receiver  granted  over  colliery  because  of  difficulty  between  joint 

tenants  as  to  its  management ;  gold  mine. 

607.  When  granted  in  suits  for  partition. 

608.  Notice  to  under-tenants  not  to  pay  rents  to  co-tenants  entitled 

thereto,  no  ground  for  receiver. 

§  603.  As  between  tenants  in  common  or  joint  owners  of 
real  property,  courts  of  equity  manifest  the  same  aversion 
to  the  appointment  of  receivers  as  in  other  cases  where  the 
jurisdiction  is  invoked  against  a  defendant  in  possession, 
under  claim  of  title,  in  a  controversy  concerning  the  right 
to  the  disputed  property.  And  it  may  be  stated  as  a  general 
rule,  that  a  receiver  will  not  be  appointed,  as  between  ten- 
ants in  common  of  realty,  unless  a  case  is  presented  amount- 
ing to  an  exclusion  by  the  defendant  of  his  co-tenants  from 
the  enjoyment  or  possession  of  the  property.1  And  when 
the  application  for  a  receiver  was  founded  on  an  affidavit  of 
improper  management  by  the  defendant,  and  of  a  reserva- 
tion of  the  profits  not  amounting  to  an  exclusion  of  his  co- 
tenants,  which  was  met  by  counter  affidavits  of  a  balance 
due  to  defendant  on  an  unsettled  account,  and  an  agreement 
for  a  reference  to  arbitration,  the  charges  of  improper  man- 
agement being  also  denied,  it  was  held  that  no  case  was 
presented  for  a  receiver.2 

§  604.  Where,  however,  one  tenant  in  common  is  in  pos- 
session of  the  property  and  in  receipt  of  the  entire  rents 
and  profits,  excluding  his  co-tenants  from  all  participation 
therein,  a  stronger  case  is  presented  for  relief  in  equity, 

iMilbank  v.  Revett,  2Meriv.,405;        2Milbank    v.   Revett,   2  Meriv., 
Vaughan  v.  Vincent,  88  N.  C,  116;    405. 
Cassetty  v.  Capps,  3  Tenn.  Ch.,  524. 


CHAP.  XIV.] 


REAL    PROPERTY. 


51i 


especially  when  the  defendant  in  possession  is  insolvent  and 
unable  to  respond  in  damages ;  and  in  such  cases,  the  right 
to  a  receiver  in  behalf  of  the  tenant  excluded  is  regarded  as 
well  established.1  Thus,  where  a  tenant  in  common  of  val- 
uable mill  property,  who,  in  addition  to  his  interest  as  a  co- 
tenant,  also  claims  a  vendor's  lien  for  a  portion  of  the 
property  sold  by  him  to  defendants,  shows  by  his  bill  that 
the  defendants,  his  co-tenants,  are  in  possession  and  receiv- 
ing the  profits,  which  they  refuse  to  share  with  the  plaintiff, 
and  that  they  are  managing  the  property  in  so  careless  a 
manner  that  the  mills  are  losing  much  of  their  custom,  and 
that  they  are  wholly  insolvent,  except  as  to  their  interest  in 
the  property  in  question,  a  clear  case  is  presented  for  the  aid 
of  a  receiver.  In  such  a  case,  the  relief  is  based  largely 
upon  the  inadequacy  of  the  remedy  at  law  for  the  protec- 
tion of  plaintiff  in  his  right  to  the  profits,  while  the  propert}r 
remains  in  defendants'  possession.2 


1  Williams  v.  Jenkins,  11  Ga.,  595. 
And  see  Street  v.  Anderton,  4  Bro. 
C.  C,  414;  Sandford  v.  Ballard,  30 
Beav. ,  109.  But  see  Tyson  v.  Fair- 
clough,  2  Sim.  &  St.,  142,  where  a 
doubt  is  expressed  as  to  whether 
even  an  actual  exclusion  of  one 
tenant  in  common  by  another  con- 
stitutes ground  for  a  receiver,  since 
if  the  exclusion  amounts  to  an 
ouster  at  law,  the  party  aggrieved 
may  assert  his  legal  title  at  law; 
and  if  not  such  an  exclusion,  the 
court  would  compel  the  tenant  in 
common  in  receipt  of  the  rents  to 
account  to  his  co-tenant. 

2  Williams  v.  Jenkins,  11  Ga.,  595. 
Mr.  Justice  Warner,  for  the  court, 
says,  p.  598:  "Do  the  allegations 
in  this  bill  show  that  the  discretion 
of  the  chancellor  in  the  appoint- 
ment of  a  receiver  was  properly 
exercised?  The  complainant  is  the 
owner  of  one-third  part  of  valuable 
property  consisting  of  a  saw  and 


grist  mill,  as  a  tenant  in  common 
with  the  defendants,  who  are  in 
possession  of  the  same,  which  is  of 
the  annual  value  of  one  or  two 
thousand  dollars.  The  complain- 
ant alleges  the  bad  management  of 
the  mills  by  the  defendants:  their 
intention  to  defraud  him,  as  mani- 
fested by  then  various  acts,  which 
the  complainant  specifically  alleges, 
and  that  they  are  insolvent,  except 
as  to  their  interest  in  the  mill  pic  >|  >- 
erty;  that  there  is  now  due  the 
complainant  for  the  original  pur- 
chase money  of  said  mills,  from  the 
defendants,  the  sum  of  $3,716. 
Assuming  the  original  price  paid 
for  the  property  to  be  its  true  value, 
(to  wit)  $5,500,  the  two-thir<ls 
thereof,  which  the  defendants  now- 
own,  is  worth  about  the  sum  of 
$3,666,  which  is  less  than  the 
amount  of  the  original  purchase 
money  now  due  the  complainant, 
so  that  when  the  original  purchase 


>1G 


RECEIVERS. 


[chap.  XIV. 


§  605.  As  regards  the  extent  of  the  receivership,  in  the 
class  of  cases  under  consideration,  it  is  held  that  a  plaintiff, 
claiming  a  moiety  of  an  estate  as  a  tenant  in  common  with 
defendant,  may  have  a  receiver  of  the  rents  and  profits  of 
such  moiety,  when  defendant  is  in  possession  of  the  whole; 
and  he  may  also  have  an  injunction  to  restrain  defendant 
from  receiving  the  rents  of  such  moiety,  as  well  as  an  order 
upon  the  tenants  of  that  part  of  the  estate  to  attorn  to  the 
receiver.1  So  it  has  been  ordered  that  a  tenant  in  common 
in  possession  should  give  security  to  his  co-tenant  for  the 
portion  of  rents  due  him,  or  in  default  thereof  that  a  re- 
ceiver be  appointed.2  And  in  the  case  of  equitable  tenants 
in  common  of  realty,  the  legal  title  to  which  is  in  a  trustee 


money  shall  be  paid  to  the  com- 
plainant (for  which  he  asserts  his 
vendor's  lien),  the  defendant  will 
have  nothing  to  pay  him  for  his 
share  of  the  annual  rents  and 
profits  thereof.  The  defendants 
are  in  the  possession  and  enjoy- 
ment of  the  property,  and  refuse  to 
allow  the  complainant  to  partici- 
pate in  the  same,  in  any  manner 
whatever.  The  complainant  shows 
that  he  has  offered  to  take  posses- 
sion of  the  mills,  and  give  bond 
and  security  to  the  defendants,  to 
account  to  them  for  their  share  of 
the  profits ;  or  to  let  them  continue 
in  possession  on  their  doing  the 
same,  to  account  to  liim  for  his  share 
of  the  profits,  which  they  have  re- 
fused. The  plaintiff  in  error,  how- 
ever, insists  that  a  court  of  equity 
will  not  interfere,  and  appoint  a 
receiver,  at  the  instance  of  one  ten- 
ant in  common  against  another, 
who  is  in  possession,  because  the 
party  complaining  may  relieve 
himself  at  law,  by  a  writ  of  parti- 
tion. Concede  that  the  complain- 
ant in  this  case  might  have  a  writ 


of  partition  at  law,  for  his  share  of 
the  property,  what  adequate  rem- 
edy has  he  at  law,  in  the  meantime, 
for  the  profits  of  the  mills,  while  in 
the  possession  of  the  defendants, 
who  are  insolvent?  We  entertain 
no  doubt  that  a  court  of  equity  has 
jurisdiction  to  appoint  a  receiver, 
at  the  instance  of  one  tenant  in 
common  against  his  co-tenants, 
who  are  in  possession  of  undivided 
valuable  property,  receiving  the 
whole  of  the  rents  and  profits  and 
excluding  their  companion  from 
the  receipt  of  any  portion  thereof, 
when  such  tenants  are  insolvent. 
2  Story's  Equity,  §  833;  Street  v. 
Anderton,  4  Brown's  Chan.  Rep., 
415 ;  Milbank  v.  Revett,  2  Merivale, 
405.  The  discretion  of  the  chan- 
cellor in  appointing  a  receiver,  in 
this  case,  was,  in  our  judgment, 
properly  exercised ;  therefore,  let 
the  judgment  of  the  court  below 
be  affirmed." 

1  Hargrave  v.  Hargrave,  9  Beav. 
549. 

2  Street  v.  Anderton,  4  Bro.  C.  C 
414. 


CHAP.  XIV.]  REAL    TKOPEETT.  517 

for  the  benefit  of  the  co-tenants,  the  fact  that  the  trustee 
has  put  one  of  the  co-tenants  in  possession  will  justify  a  re- 
ceiver in  behalf  of  the  other  tenants  over  their  own  shares, 
but  not  over  the  entire  property,  since  the  tenant  in  posses- 
sion is  entitled  to  the  possession  of  his  own  share  of  the 
property.1  But  when  the  conduct  of  the  defendant  in  pos- 
session is  such  as  to  amount  to  an  exclusion  of  his  co-ten- 
ants, they  are  entitled  upon  the  hearing  to  a  receiver  of  the 
whole  property.2 

§  606.  "While,  as  has  already  been  shown,  equity  is  gen- 
erally averse  to  extending  the  aid  of  a  receiver,  as  between 
joint  owners  or  tenants  in  common,  yet  in  cases  of  mining 
property  or  collieries,  there  would  seem,  from  the  nature  of 
the  property,  to  be  stronger  reasons  why  the  relief  should 
be  allowed  when  there  is  a  disagreement  as  to  the  manage- 
ment of  the  property,  than  in  cases  of  ordinary  real  estate. 
And  where  there  are  a  large  number  of  persons  interested 
and  owning  shares  in  mining  property,  as  in  a  colliery,  upon 
a  difficulty  between  them  as  to  the  management  of  the  prop- 
erty, a  receiver  may  be  allowed,  although  the  owners  are 
tenants  in  common,  the  relief  being  granted  to  prevent  the 
destruction  of  the  subject-matter.3    So  in  an  action  brought 

JSandford  v.  Ballard,  30  Beav.,  culiarity  of  this  species  of  produce, 

109.  the    court    gives    an     injunction 

2Sandfordv.  Ballard,  33  Beav.,  against  trespassers,   and  allows  a 

401.  party  to  maintain  a  suit  for  tin- 

3Jefferys  v.  Smith,  1  Jac.  &  W.,  profits,  which,   in   other  cases,   it 

298.     Lord  Eldon,  in  this  case,  re-  would    not    do.      Here    there    are 

ferring  to  a  note  of  a  case  before  twenty  shares;  and  if  each  owner 

Lord  Hardwicke,  in  which  he  held  may  employ  a  manager  and  a  set 

that  a  colliery  was  in  the  nature  of  of  workmen,  you  destroy  the  sub- 

a  trade,  persons  owning  different  ject  altogether ;  it  renders  it  impos- 

interests  in  which  were  to  be  re-  sible  to  carry  it  on.     It  appears  to 

garded  as  in  the  nature  of  partners,  me,  therefore,  upon  general  princi- 

and  that  the  difficulty  of  manage-  pies,  without  reference  tothepar- 

ment  gave  a  court  of  equity  juris-  ticular  circumstances  of  any  case, 

diction  as  to  mesne  profits  which  it  that  where  persons  are  concerned 

would  not  assume  with  regard  to  in  such  an  interest  in  lands  as  a 

other  lands,   observes:     "On  this  mining  concern  is,  this  court  will 

ground,  and  on  account  of  thepe-  appoint  a  receiver,  although  there 


518 


RECEIVERS. 


[chap.  XIV. 


by  plaintiffs  claiming  to  be  the  sole  owners  of  a  gold  mine, 
averring  that  defendants  have  unlawfully  entered  upon  the 
mine  and  are  taking  away  the  gold,  defendants  claiming  an 
interest  as  co-tenants,  while  the  court  may  refuse  to  enjoin 
the  working  of  the  mine  upon  grounds  of  public  policy  and 
because  of  the  peculiar  nature  of  the  property,  a  receiver 
may  be  allowed  pendente  lite,  the  defendants  being  of  doubt- 
ful responsibility.1 

§  607.  The  aid  of  a  receiver  is  sometimes  granted  in  ac- 
tions for  the  partition  of  real  estate  between  tenants  in 
common,  when  it  is  apparent  to  the  court  that  the  relief  is 
necessary  to  protect  all  parties  in  interest.2  And  in  such  an 
action,  when  defendants  not  only  deny  plaintiff's  title,  but 
have  endeavored  to  entangle  the  whole  title,  and  are  not 
disposed  to  account  for  the  rents  and  profits,  equity  may 
interfere  by  a  receiver.3  And  when,  in  an  action  for  parti- 
tion, it  is  shown  that  a  portion  of  the  property  can  not  be 
rented,  in  consequence  of  the  refusal  of  one  of  the  tenants 
in  common  to  unite  with  the  others,  and  that  the  rents  of 
the  remaining  portions  can  not  be  collected  because  of  the 
interference  of  such  co-tenant,  a  receiver  may  be  appointed 
to  preserve  the  property  from  loss  pendente  lite* 

§  608.  Where  one  of  several  co-tenants  has  entered  into 
an  agreement  with  the  others,  whereby  they  are  authorized 
to  receive  all  the  rents  of  the  premises  until  they  have  re- 
paid an  amount  due  them,  the  fact  that  such  co-tenant  after- 
ward notifies  the  tenants  of  the  premises  to  pay  their  rents 
to  him,  and  not  to  his  co-tenants,  affords  no  ground  for  in- 
terfering by  the  appointment  of  a  receiver,  such  a  notice 
not  being  regarded  as  equivalent  to  an  exclusion.5 


are  tenants  in  common  of  it.  Take 
the  order  for  a  receiver,  and  let 
every  owner  be  at  liberty  to  pro- 
pose himself  as  manager  before  the 
master." 

i  Parker  v.  Parker.  82  N.  C,  165. 

apignolet  v.  Bushe,  28  How.  Pr., 
9;  Duncan  v.  Campau,  15  Mich., 


415;  Weise  v.  Welsh,  30  N.  J.  Eq., 
431;  Goodale  v.  Fifteenth  District 
Court,  56  Cal.,  26. 

5 Duncan  v.  Campau,  15  Mich., 
415. 

4  Pignolet  v.  Bushe,  28  How.  Pr.,9. 

5  Tyson  v.  Fairclough,  2  Sim.  & 
St.,  142. 


CHAP.  XIV.]  REAL    PROPERTY.  519 

III.  Receivers  as  Between  Vendors  and  Purchasers. 

§  609.     When  vendor  entitled  to  receiver  in  action  for  specific  perform- 
ance. 

610.  When  vendee  so  entitled. 

611.  Vendor  allowed  receiver  in  suit  to  recover  possession  on  showing 

defendant's  insolvency  and  commission  of  waste. 

612.  Purchasers  allowed  receiver  as  against  settlement  made  by  hus- 

band upon  wife  after  marriage. 

613.  When  purchaser  at  sheriff's  sale  granted  a  receiver. 

614.  When  purchaser  of  gold  mine  aUowed  a  receiver. 

615.  When  granted  over  colliery  or  mine ;  what  required  of  the  re- 

ceiver ;  when  discharged. 

616.  Bill  not  entertained  which  will  affect  interest  of  purchasers  not 

made  parties. 

617.  When  receiver  required  to  return  purchase  money  and  counsel 

fees. 

§  609.  The  aid  of  equity  by  a  receiver  is  sometimes  nec- 
essary as  between  vendors  and  purchasers  of  real  property, 
either  in  connection  with  proceedings  to  compel  a  specific 
performance  of  the  contract  of  sale,  or  for  the  protection 
of  the  rights  of  a  purchaser  after  sale.  And  the  vendor  of 
real  estate,  upon  a  bill  against  the  vendee  for  a  specific 
performance  of  the  contract  of  purchase,  may  have  a  re- 
ceiver in  aid  of  his  action  when  it  is  shown  that  the  defend- 
ant is  insolvent,  and  that  all  his  property,  real  and  personal, 
including  the  estate  which  is  the  subject  of  the  contract,  is 
about  to  be  conveyed  to  trustees  for  the  benefit  of  his  cred- 
itors. The  relief,  under  such  circumstances,  is  Avarranted 
upon  the  ground  that,  if  the  contract  can  be  enforced,  the 
vendor  has  a  hen  upon  the  property  for  the  unpaid  purchase 
money ;  while,  if  it  can  not  be  enforced,  the  purchaser  has 
a  lien  to  the  extent  of  the  amount  already  paid  by  him  on 
account  of  his  purchase ;  and  upon  the  further  ground  that 
the  purchaser's  insolvency  and  attempt  to  convey  the  estate 
would  embarrass  the  title.1     So  when  a  person  has  con- 

'  Hall    v.    Jenkinson,   2  Ves.   &    in  this  case,  the  purchaser  had  never 
Boa.,  125.     It  is  to  be  noticed  that    been  let  into  exclusive  possession 


520  RECEIVERS.  [CHAP.  XIV. 

tractecl  for  the  purchase  of  real  estate,  but  is  dissatisfied 
with  the  title,  and  refuses  on  that  ground  to  conclude  the 
purchase,  in  an  action  against  him  to  enforce  a  specific  per- 
formance of  the  contract,  a  receiver  may  be  appointed  for 
the  management  of  the  property,  pending  a  reference  to 
determine  as  to  the  validity  of  the  title.1  When  a  receiver 
is  appointed  in  aid  of  a  bill  against  the  purchaser  for  specific 
performance  of  his  agreement,  if  defendant  is  compelled  by 
the  court  to  carry  out  the  agreement  and  to  complete  his 
purchase,  the  receiver  will  be  considered  as  his  receiver,  and 
the  receiver's  possession  as  his  possession.2  But  since,  in 
such  an  action,  the  receivership  is  merely  ancillary  to  the 
principal  relief  sought,  if  the  principal  remedy  is  prema- 
turely  invoked,  there  being  no  default  which  would  entitle 
the  vendor  to  a  sale,  the  order  appointing  a  receiver  should 
be  revoked.3  And  in  Tennessee,  the  courts  refuse  the  aid 
of  a  receiver,  in  an  action  to  enforce  a  vendor's  lien,  upon 
the  ground  that  it  is  no  part  of  the  contract  of  sale,  either 
expressed  or  implied,  that  the  vendor  shall  appropriate  any- 
thing but  the  land  itself  by  a  sale  to  satisfy  the  unpaid  pur- 
chase money,  and  because  by  the  contract  the  purchaser  is 
entitled  to  possession  until  the  land  is  sold  in  satisfaction  of 
the  debt.4  But  in  the  same  state,  after  a  decree  in  favor 
of  vendor  seeking  to  subject  the  land  to  the  payment  of  the 
purchase  money,  from  which  decree  defendant  has  appealed, 
the  failure  of  defendant  to  pay  taxes  has  been  held  to  be 
sufficient  ground  for  a  receiver  pending  the  appeal.5 

§  610.  The  relief,  in  the  class  of  cases  under  considera- 
tion, is  not  confined  to  actions  for  specific  performance, 
brought  by  a  vendor  against  the  vendee,  but  the  jurisdiction  is 
also  exercised  in  behalf  of  the  vendee  instituting  such  an 
action.    And  upon  a  bill  by  the  vendee  to  compel  specific  per- 

of  tlie  premises,  the  possession  hav-  3  Jones  v.  Boyd,  80  N.  C,  258. 

ing  been  partly  in  the  vendor  and  ^  Morford  v.  Hamner,  3  Baxter, 

partly  in  the  purchaser.  891 . 

iBoehm  v.  Wood,  2  Jac.  &  W.,  5  Darusmont  v.   Patton,   4   Lea, 

236.  597. 

2  Boehm  v.  Wood,  Turn.  &  R.,  332. 


CHAP.  XIV.]  REAL    PROPERTY.  521 

f ormance  of  the  contract  of  sale,  a  receiver  may  be  appointed 
to  secure  the  property  pendente  lite,  when  the  vendor  has 
fraudulently  repossessed  himself  of  the  property.1 

§  611.  When  a  vendor  of  real  estate,  who  has  never 
parted  with  the  legal  title,  having  only  given  the  purchaser 
a  title  bond,  sues  to  recover  possession  because  of  non-pay- 
ment of  purchase  money,  and  seeks  to  have  the  property 
sold  and  its  proceeds  applied  in  payment  of  the  purchase 
price,  it  is  proper  to  appoint  a  receiver  to  take  charge  of 
the  property,  upon  allegations  of  defendant's  insolvency,  and 
that  he  is  committing  waste  by  cutting  off  the  timber, 
which  constitutes  the  chief  value  of  the  property.2  But  the 
appointment  of  a  receiver,  in  such  a  case,  does  not  in  law 
have  the  effect  of  changing  the  possession,  but  only  sus- 
pends the  right  of  actual  enjoyment  pending  the  litigation.:! 
And  when  the  vendor  of  real  estate,  having  given  a  bond  or 
contract  to  convey,  upon  default  of  the  purchaser,  files  a  bill 
for  the  specific  performance  of  the  contract  and  for  a  sale 
of  the  land,  if  the  premises  are  an  inadequate  security  for 
the  unpaid  purchase  money  and  the  vendee  is  insolvent,  the 
vendor  is  entitled  to  a  receiver  of  the  rents  and  profits  pen- 
dente lite,  upon  the  same  ground  that  a  mortgagee  is  en- 
titled, under  like  circumstances,  to  a  receiver  in  aid  of  a 
foreclosure.4     So  when  the  vendee  is  in  possession  under  a 

1  Dawson  v.  Yates,  1  Beav.,  301.  controversy,  and  especially  where 

'-McCaslin  v.  State,  44  Intl.,  151.  defendant  only  claimed  the  title 

The  court,  Buskirk,  J.,  say,  p.  174:  and  possession  of  such  land  under 

"Nor  do  we  think  the  court  ex-  a  title  bond,  the  purchase  money 

ceeded  its  power  in  appointing  a  being  unpaid,  and  it  being  alleged 

receiver.     The  third  clause  of  sec-  and  proved  that  the  defendant  was 

tion  199,  2  G.  &  H.  (statutes),  152,  insolvent,  would  be  such  material 

authorizes  the  appointment  of  a  re-  injury  as  would  justify  the  court  in 

ceiver  '  in  all  cases  when  it  is  shown  appointing  a  receiver  to  take  charge 

that  the  property,  fund  or  rents,  of  and  preserve  such  land  during 

and    profits    in  controversy  is    in  the  litigation."     But  see  Guernsey 

danger  of  being  lost,  removed,  or  v.  Powers,  9  Hun,  78. 

materially  injured.'    There   seems  SMcCaslunw.  State,  44  Ind.,  151. 

to  be  no  room  to  doubt  that  the  *  Phillips  v.  Eiland,  52  Miss.,  721; 

cutting    down    and    removing    of  Smith  v.  Kelley,  31  Hun,  387. 
valuable  timber  from  the  land  in 


522  KECEIVEKS.  [CHAP.  XIV. 

bond  to  convey  title  and  receives  the  rents  and  profits  for 
several  years,  permitting  the  premises  to  deteriorate  in  value 
through  want  of  repairs  and  improper  cultivation,  so  that 
they  are  insufficient  to  pay  the  amount  due,  and  the  Vendee 
becomes  insolvent  and  is  adjudicated  a  bankrupt,  a  receiver 
of  the  rents  and  profits  will  be  appointed  until  the  final 
hearing,  no  part  of  the  purchase  money,  principal  or  inter- 
est, having  been  paid.1  But  the  mere  insolvency  of  the 
vendee,  if  known  to  the  vendor  at  the  time  of  sale,  will  not 
warrant  a  receiver  upon  a  bill  to  rescind  the  contract  of 
sale  and  for  an  accounting  of  rents,  no  fraud  being  charged 
in  the  bill,  and  the  allegations  of  waste  being  fully  denied.2 
And  when  it  is  not  shown  that  the  vendee  is  insolvent,  and 
the  amount  of  the  indebtedness  is  disputed  and  undeter- 
mined, a  receiver  should  not  be  appointed.3  But  in  Ken- 
tucky, the  general  doctrine  under  consideration  does  not 
prevail,  and  it  is  there  held  that  when  the  vendor  conveys 
real  estate  and  delivers  possession  to  his  vendee,  reserving  a 
lien  for  the  purchase  money,  the  lien  attaches  to  the  land  and 
not  to  the  rents  and  profits.  The  vendee,  therefore,  having 
the  legal  title  and  the  right  to  the  use  and  occupancy  of  the 
property,  a  receiver  will  not  be  appointed  in  an  action  to 
enforce  the  lien,  in  the  absence  of  waste  or  improper  culti- 
vation, although  it  is  shown  that  the  vendee  is  insolvent  and 
that  the  land  is  not  worth  more  than  the  amount  of  the  in- 
debtedness.4 

§  612.  Purchasers  of  real  estate,  as  against  an  adverse 
party  in  possession  claiming  a  paramount  title,  have  been 
allowed  the  protection  of  a  receiver  upon  a  bill  to  perfect 
their  title  against  such  adverse  claimant ;  although  the  re- 
lief is  proper  only  when  it  is  apparent  that  the  purchaser 
seeking  the  aid  of  the  court  has  a  good  equitable  title, 
against  which  defendant's  title  can  not  prevail,  and  that  the 

i  Tufts  v.  Little,  56  Ga.,  139.  See,  2  Jordan  v.  Beal,  51  Ga.,  602. 

also,  Gunby  v.  Thompson,  56  Ga.,  3  Hughes  v.   Hatchett,   55  Ala., 

316 ;  Chappell  v.  Boyd,  56  Ga.,  578 ;  631. 

Worrffl  v.  Coker,  56  Ga.,  666.  "Colons  v-  Richart,  14  Bush,  621. 


CHAP.  XIV.] 


HEAL   EBOPEET1', 


523 


purchaser  can  compel  the  performance  of  his  contract  of 
purchase.  Thus,  purchasers  for  value  from  a  husband  have 
been  allowed  a  receiver,  as  against  a  voluntary  settlement 
made  by  the  husband  upon  his  wife  after  marriage,  upon 
the  ground  that  such  settlement  gave  no  title  as  against  the 
purchasers,  who  were,  therefore,  entitled  to  a  specific  per- 
formance of  their  contract.  And  the  receiver  may  be  ap- 
pointed, under  such  circumstances,  before  answer.1 

§  613.  A  purchaser  of  lands  at  a  judicial  sale,  who 
obtains  a  sheriff's  deed  therefor,  upon  the  expiration  of  the 
statutory  period  of  redemption,  is  entitled  to  possession  of 
the  lands,  and  of  the  crops  growing  thereon  as  an  incident 
to  the  realty.  He  may,  therefore,  in  an  action  to  obtain 
such  possession,  have  a  receiver  to  take  charge  of  the  grow- 
ing crops  with  a  view  to  properly  harvesting  and  preparing 
them  for  market,  and  holding  the  proceeds  subject  to  the 
final  order  of  the  court,  defendants  being  alleged  to  be  in 
a  condition  of  insolvency.2  And  it  is  an  appropriate  exer- 
cise of  the  jurisdiction  to  appoint  a  receiver  in  aid  of  the 
possession  of  a  purchaser  at  a  sheriff's  sale,  under  judgment, 


i  Metcalfe  v.  Pulvertoft,  1  Ves.  & 
Bea.,  180. 

2  Corcoran  v.  Doll,  35  Cal.,  476. 
Sawyer,  C.  J.,  for  the  court,  says, 
p.  479 :  "If  the  facts  stated  in  the 
complaint  are  true,  plaintiffs  ac- 
quired the  title  to  the  land,  and  the 
defendants  are  properly  restrained 
from  selling  or  incumbering  the 
land,  till  the  rights  of  the  parties 
can  be  determined.  So,  also,  we 
think  the  record  shows  a  proper 
case  for  restraining  an  appropria- 
tion of  the  crops  and  for  a  receiver. 
It  is  not  a  question  of  rents  and 
profits  merely,  during  the  time  for 
redemption.  That  time  had  already 
expired,  and  the  plaintiffs  had  ob- 
tained the  sheriff's  deed  and  were 
entitled  to  the    possession  of  the 


land.  The  growing  crops  belonged 
to  the  plaintiffs  as  a  part  of  the 
land.  The  principal  parties  are  al- 
leged to  be  insolvent,  and  all  the 
transactions  on  the  part  of  the  de- 
fendants, on  the  theory  of  the  com- 
plaint, constitute  a  scheme  to  de- 
fraud tbe  plaintiffs,  to  which  the 
pretended  tenant  in  possession,  as 
well  as  the  other  defendants,  was 
a  party.  We  think  there  is  clearly 
a  cause  of  action  stated,  both  for 
an  injunction  and  a  receiver.  It' 
the  tenant  in  possession  is  entitle'! 
to  anything  for  his  services  in  cul- 
tivating the  land  during  the  time 
for  redemption,  he  is  a  party  to  the 
suit,  and  his  equities  can  be  ad- 
justed when  the  affairs  of  the  re- 
ceivership are  settled  up." 


524  RECEIVERS.  [CUAP.  XIV. 

upon  a  bill  alleging  that  the  defendant  debtor  has  fraud- 
ulently conveyed  his  real  estate  with  a  view  to  delay  and 
defeat  his  creditors.  Such  a  state  of  facts,  it  is  held,  would 
clearly  warrant  a  receiver  in  aid  of  the  judgment  creditor 
himself,  and  the  right  of  a  purchaser  at  a  sale  under  the 
judgment  to  the  same  relief  is  deemed  equally  clear.1 

§  614.  "While  the  courts  are  usually  averse  to  taking  pos- 
session of  lands  by  a  receiver  pending  litigation  between 
conflicting  claimants,  it  is  held,  in  California,  that  the  work- 
ing of  gold  mines  and  the  extraction  of  gold  therefrom  are 
something  more  than  the  ordinary  use  of  real  estate  by  one 
in  possession,  requiring  more  than  the  usual  remedies  for 
the  protection  of  a  purchaser.  Such  a  use  of  the  realty 
constitutes  a  waste  or  destruction  of  the  very  property 
itself,  or  all  that  is  of  essential  value.  It  is,  therefore,  held 
that  a  purchaser  at  a  mortgage  sale  of  an  interest  in  a  min- 
ing claim  may  have  a  receiver,  when  the  mortgagor  is  still 
in  possession,  working  the  claim  and  refusing  to  pay  the 
purchaser  his  interest  in  the  dividends,  it  being  alleged  that 
the  mortgagor  is  insolvent,  and  that  the  claim  will  be 
worked  out  and  exhausted  before  the  statutory  period  for 
redemption  expires.2 

§  615.  The  aid  of  a  receiver  is  sometimes  granted  in 
cases  of  mines  or  collieries  pending  a  litigation  which  is  to 
determine  the  title  and  rights  of  the  parties,  when,  from 
the  peculiar  nature  of  the  property,  it  is  necessary  that  it 
should  be  kept  in  operation  and  preserved  pendente  lite. 
Thus,  where  purchasers  of  a  collieiy  file  their  bill  to  set 

'Mays    v.   Rose,   Freeni.  (Miss.),  party,  when,  he  establishes  a  prima 

703.  facie  right  to  the  property,  or  to 

-'Hill  v.  Taylor,  22  Cal.,  191.     It  an  interest  in  the  property  which 

is  to  be  observed  that  the  Practice  is  the  subject  of  the  action,  and 

Act  of  California,  §  143,  provides  which  is  in  possession  of  an  adverse 

that  a  ' '  receiver  may  be  appointed  party,  and  the  property  or  its  rents 

by  the  court  in  which  the  action  is  and  profits  are  in  danger  of  being 

pending,   or  by  a  judge  thereof,  lost  or  materially  injured  or  im- 

first    before  judgment,   provision-  paired." 
ally,  on  the  application  of  either 


CHAP.  XIV.] 


REAL    PROPERTY. 


525 


aside  their  purchase  and  to  enjoin  their  notes  given  for  pur- 
chase mone}r,  on  the  ground  of  fraudulent  representations 
made  by  defendants  to  induce  them  to  purchase,  if,  on  the 
case  presented,  there  is  much  doubt  as  to  the  ownership  of 
the  colliery,  and  it  is  of  importance  that  it  should  be  worked 
to  prevent  flooding  and  other  injury,  and  also  to  prevent  a 
forfeiture  to  the  landlord,  a  fit  case  is  presented  for  the  ap- 
pointment of  a  receiver  pendente  lite.  And  the  relief,  in 
such  a  case,  is  founded  upon  the  necessity  of  preserving  the 
property  pending  the  controversy,  in  order  that,  when  it  is 
finally  determined  to  whom  it  belongs,  full  and  complete 
justice  may  be  done.  And  plaintiffs  may  be  required  to 
supply  the  means  of  carrying  on  the  colliery,  reserving  the 
ultimate  question  of  expense  for  future  determination.  The 
receiver  thus  appointed  will  be  required  to  keep  the  colliery 
going,  and  out  of  its  receipts  to  pay  all  outgoings;  and  if 
the  receipts  are  insufficient,  plaintiffs  may  be  required  to 
supply  him  with  the  necessary  funds  for  that  purpose.1    But 


iGibbs  v.  David,  L.  R.,  20  Eq., 
373.  The  doctrine  of  the  text  is 
very  clearly  stated  in  the  opinion 
of  Vice-Chancellor  Malins  as  fol- 
lows, p.  375:  "As  far  as  I  know 
of  the  case  at  present,  although  the 
precise  circumstances  certainly 
have  not  occurred  before,  I  can 
not  help  thinking  that,  upon  prin- 
ciple. I  shall  not  much  err  if  I  ac- 
cede to  the  application  of  the 
plaintiffs.  The  question  brought 
before  the  court  is  a  very  remarka- 
ble one.  The  two  plaintiffs,  Mr. 
Gibbs  a?id  Mr.  Joachim,  are,  it  is 
stated,  merchants  in  the  city  of 
London,  and  their  case  is  this: 
that,  by  representations  made  to 
them  by  the  defendant  Webb,  they 
have  been  induced  to  purchase  a 
colliery  in  South  Wales.  They  al- 
lege that  the  representations  made 
by  Webb  were  entirely  false,  and 


that  if  they  had  known  the  false- 
hood of  such  representations  they 
would  not  have  purchased  the  col- 
liery. The  persons  from  whom  the 
colliery  was  bought  are  Mr.  Cot- 
ton's clients,  Charles  William 
David  and  John  Sloper,  and,  cf 
course,  if  it  turns  out  that,  what- 
ever representations  were  made  by 
Webb,  they  were  made  without 
the  knowledge  of  these  two  defend- 
ants, they  will  not  be  answerable, 
and  the  suit  will  fail.  But  the  bill 
alleges  that,  in  point  of  fact,  Webb 
was  the  bribed  agent  of  these  de- 
fendants to  make  these  false  repre- 
sentations ;  and  if  this  turns  out  to 
be  the  truth,  and  is  established  at 
the  hearing,  the  contract  will  be 
set  aside,  the  suit  will  succeed,  tko 
plaintiffs  will  lie  entitled  to  be  re- 
lieved from  all  further  payments, 
and  will  take  out  of  court  all  tlm 


520 


RECEIVERS. 


[chap.  XIV. 


when  the  effect  of  appointing  a  receiver  in  a  controversy 
as  to  the  right  to  mining  property  is  to  suspend  the  opera- 


moneys  paid  in  and  all  that  may  be 
hereafter  brought  in.  In  other 
words,  the  contract  will  be  undone. 
But  the  property  is  a  colliery,  and 
a  going  colliery,  and  both  sides  ad- 
mit that  it  must  be  kept  going  or 
the  lease  will  be  forfeited;  and 
moreover,  if  it  is  not  kept  going,  it 
will  be  drowned  out,  and,  therefore, 
it  is  absolutely  necessary  it  should 
be  worked.  In  this  state  of  things, 
I  think  it  is  clearly  uncertain  to 
whom  the  colliery  belongs.  If  the 
plaintiffs  are  right  in  then-  allega- 
tions on  the  bill,  the  colliery  does 
not  belong  to  them,  but  to  David 
and  Sloper.  If,  on  the  other  hand, 
the  allegations  are  erroneous,  then 
the  colliery  belongs  to  the  plaint- 
iffs, and  David  and  Sloper  have 
nothing  to  do  with  it.  It  is  accord- 
ing to  the  practice  of  the  court  to 
keep  property  in  security  until  the 
right  is  decided,  and  therefore,  it 
being  totally  uncertain  to  which  of 
these  two  parties  this  colliery  be- 
longs, it  does  seem  to  me,  in  ac- 
cordance with  practice  and  princi- 
ple, that  the  property  shall,  as  far 
as  possible,  be  kept  in  security. 
Then,  it  is  asked,  why  should  this 
be  done?  The  plaintiffs  are  in  pos- 
session; they  say  that  they  were 
fraudulently  induced  to  take  pos- 
session, and,  being  in  possession, 
they  are  incompetent  to  deal  with 
the  property  in  its  present  position, 
and  if  they  should  succeed  in  this 
suit  they  will  have  a  demand 
against  the  defendants  for  all  mon- 
eys properly  expended  in  working 
the  colliery.  It  is  of  very  great 
importance  that  the  colliery  should 


be  so  worked  as  to  leave  as  little 
doubt  as  possible  whether  it  was 
properly  or  improperly  worked.  If 
the  court  appoints  an  officer  com- 
petent to  manage  a  colliery,  and 
he  says,  '  I  have  carried  on  the  col- 
liery and  made  a  gain,'  then  the 
gain  will  belong  to  the  party  to 
whom  the  mine  belongs.  If,  on 
the  other  hand,  he  says,  '  I  have 
been  obliged  to  carry  on  the  col- 
liery at  a  loss,'  that  loss  will  have 
to  be  borne  by  the  plaintiffs,  if  they 
fail  in  their  suit,  and  by  the  defend- 
ants if  the  plaintiffs  succeed.  Now 
I  will  assume,  in  favor  of  the  de- 
fendants, that  all  these  charges  are 
unfounded  and  that  the  suit  will 
fail,  and  I  will  continue  to  act  upon 
that  assumption  until  the  contrary 
is  approved.  If,  therefore,  the  suit 
does  fail,  and  a  receiver  is  ap- 
pointed, and  he  is  supplied  with 
the  means  of  carrying  on  the  col- 
liery by  the  plaintiffs,  what  dam- 
age will  be  done  to  the  defendants? 
It  is  impossible  that  they  can  be 
damaged  to  the  extent  of  a  farthing. 
If,  on  the  other  hand,  the  suit 
should  succeed,  then  a  very  mate- 
rial benefit  may  arise  to  the  plaint- 
iffs in  the  manner  I  have  pointed 
out,  on  its  being  ascertained  in  this 
way  what  is  the  proper  expenditure 
in  carrying  on  the  colliery.  There- 
fore I  shall  do  what  this  court  is 
constantly  in  the  habit  of  doing 
when  property  is  in  dispute,  and  as 
was  done  in  Boehm  v.  Wood,  2 
Jac.  &  W.,  236.  .  .  It  seems  to 
me,  in  this  case,  that  the  court 
should  appoint  a  protector  or  man- 
ager of  the  estate,  in  order  that. 


CHAP.  XI Y.]  EEAL  PKOPERTT.  527 

tion  of  the  mines,  the  receiver  having  no  funds  with  which 
to  meet  the  necessary  outlays,  the  appointment  will  be  re- 
garded as  improvident,  and  the  receiver  will  be  discharged, 
when  it  is  not  alleged  that  defendants  in  possession  are  in- 
solvent, or  that  they  are  unable  to  account  for  the  mesne 
profits,  or  that  the  property  is  being  injured  under  their 
management.1 

§  616.  Equity  will  not  entertain  a  bill  for  a  receiver  of 
the  rents  and  profits  of  real  property  which  will  affect  the 
interests  of  purchasers  of  the  property  who  are  not  made 
parties  to  the  action,  since  all  parties  directly  interested  in 
the  subject-matter  must  be  brought  before  the  court.  And 
when  this  is  not  done,  a  demurrer  to  the  bill  for  want  of 
proper  parties  will  be  sustained.2 

§  617.  Where  a  receiver  sold  real  estate  at  auction  under 
an  order  of  court,  and  the  purchasers  afterward  refused  to 
complete  the  purchase  on  the  ground  of  an  alleged  defect 
of  title,  but  the  court  ordered  them  to  complete  the  pur- 
chase, and  the  receiver  afterward  consented  that  the  order 
should  be  held  void  and  that  the  purchase  might  be  an- 
nulled, the  receiver  was  required  by  the  court  to  return  the 
purchase  money,  together  with  counsel  fees  to  the  purchasers 
for  examining  the  title  and  in  resisting  the  proceeding  to 
have  the  purchase  perfected.3 

when  it  is  decided  to  whom  it  be-  is  to  be  appointed  and  the  colliery 

longs,  justice  may  be  done.    There-  is  to  be  carried  on  will  be  reserved, 

fore,  upon  principle,  and,  I  think,  If  the  suit  succeeds,  it  will  be  at 

upon  authority,  I  shall  accede  to  the  expense  of  the  defendants." 

the  application  that  a  receiver  be  1  Carter  v.  Hoke,  64  N.  C. ,  348. 

appointed.      The    plaintiffs    must  2Lumsden  v.  Fraser,  1   Myl.   & 

supply  the  means  of  carrying  on  Cr.,  589,  affirming  S.  C,  7  Sim.,  555. 

the  colliery,  and,  as  in  Boehm  v.  3  Drake  v.  Goodrich,  6  Blatchf., 

Wood,  2  Jac.  &  W.,  236,  the  ques-  531. 
tion  at  whose  expense  the  receiver 


528  RECEIVERS.  [CHAP.  XIV. 


IV.  Functions  of  the  Receiver. 

§  G18.     Control  over  rents  and  profits ;  tenants  required  to  attorn  to  re- 
ceiver ;  English  practice. 

619.  Arrears  of  rent ;  future  rents :  Irish  practice. 

620.  Motion  to  compel  tenants  to  attorn ;  costs. 

621.  At  what  time  liability  of  tenant  to  receiver  attaches;  when  pay- 

ment to  third  person  treated  as  payment  to  receiver. 

622.  Receiver's  right  to  distrain,  decisions  unsettled ;  order  of  court 

to  distrain. 

623.  Receiver  not  allowed  to  distrain  when  plaintiff  still  proceeds 

with  his  action. 

624.  Notice  to  tenant  of  appointment  necessary  before  receiver  can 

sue. 

625.  Attachment  against  tenant  for  failure  to  pay  rent  to  receiver. 

626.  Attachment  must  be  discharged  before  receiver  can  distrain,  and 

vice  versa. 

627.  Disputed  title  not  determined  by  attachment ;  attachment  not 

granted  pending  abatement  of  suit  by  death  of  plaintiff. 

628.  Order  authorizing  receiver  to  collect  rents  through  defendant, 

effect  of ;  not  appealable. 

629.  Receiver  should  move  to  invest  rents ;  rights  of  claimants. 

630.  Right  to  rents  in  case  of  receiver  over  corporation. 

631.  Receiver  continued  after  sale  until  conveyances  are  executed. 

632.  Receiver  of  leasehold  premises  bound  to  pay  head-rent. 

633.  Right  to  make  repairs. 

634.  Duty  of  receiver  in  case  of  waste;  injunction  against  waste. 

635.  Sale  of  property  free  from  all  liens. 

636.  What  purchaser  at  receiver's  sale  bound  to  see ;  his  title  not  af- 

fected by  irregularities  if  court  had  jurisdiction. 

637.  Receiver  may  enjoin  tenant  from  using  premises  for  purpose 

prohibited  by  lease. 

638.  Leave  to  lease  property ;  lease  will  not  bind  infant  remainder- 

man. 
638  a.  Rent  due  third  parties ;  dilapidations. 

§  618.  The  most  important  function  of  a  receiver  over 
real  estate  is  the  control  of  the  rents  and  profits  accruing 
from  the  property  pending  the  receivership,  the  right  to  such 
rents  being  generally  vested  in  the  receiver  by  his  order  of 
appointment.  And  in  appointing  a  receiver  over  real  prop- 
erty of  a  defendant,  the  correlative  rights  of  landlord  and 


CHAP.    VI^  J  TEAL    PROPERTY.  529 

tenant  subsisting  between  the  defendant  and  his  tenants  are 
not  changed.  The  court,  through  its  receiver,  takes  upon 
itself  the  possession  previously  existing  in  defendant,  and 
while  the  court  has  additional  and  larger  powers  for  enforc- 
ing the  landlord's  rights,  the  rights  themselves  remain 
unaltered.1  It  was  the  practice  of  the  English  Court  of 
Chancery,  on  appointing  a  receiver  of  the  rents  and  profits 
of  realty,  to  direct  that  the  tenants  attorn  to  the  receiver, 
and  if  they  refused  so  to  do  the  proper  course  was  to  move 
that  they  be  required  to  attorn,  thus  enabling  them  to  be 
heard  before  the  court  as  to  whether  they  were  actually  ten- 
ants of  the  premises  in  controversy.  And  if  no  cause  was 
shown  by  the  tenants  against  such  motion,  the  court  would 
grant  an  order  requiring  them  to  deliver  up  possession  to 
the  receiver.2  When  a  tenant  of  a  portion  of  the  property 
under  a  former  lease  attorns  to  the  receiver,  and  for  a  time 
pays  him  the  rent,  upon  his  subsequent  refusal  to  pay  rent 
to  the  receiver  the  court  will  grant  an  order  compelling  him 
so  to  do.3 

§  019.  Under  the  practice  of  the  Irish  Court  of  Chancery, 
the  receiver  is  entitled  to  all  arrears  of  rent  unpaid  at  the 
time  of  the  order  of  reference  for  his  appointment.4  And 
although  the  tenants  are  only  responsible  from  the  service 
of  the  order  requiring  them  to  pay  to  the  receiver,  jet  the 
person  entitled  to  receive  the  rent  and  arrears  is  bound  from 
the  date  of  the  order  of  reference  to  appoint,  when  he  has 
had  notice  of  such  order.5    And  when  a  receiver  is  appointed 

'Commissioners  v.   Harrington,  see  Harrison  v.  Fitzgerald,  Ir.  Rep., 

11  L.  R.,  Ir.,  127.  10  Eq.,  394.    As  to  the  apportion- 

2  Reid  v.  Middleton,  Turn.  &  E.,  ment  of  rent  between  that  part  of 
455.  the  premises  over  which  the  rc- 

3  Hobson  v.  Sherwood,  19  Beav.,  ceiver  is  continued  and  that  part  as 
575.  to  which  he  is  discharged,  when  lie 

4  McDonnell  v.  White,  11  H.  L.  is  discharged  as  to  a  part  before  the 
Rep.,  570;  Ilullier  v.  Hedges,  2  Ir.  termination  of  the  entire  receiver- 
Ch.,  N.  S.,  370.  As  to  the  power  of  ship,  see  Beechey  v.  Smyth,  11  L. 
a  court  of  equity  to  abate  rent  re-  R.,  Ir.,  88. 

served  on  a  lease  made  before  the       5  Hollier  v.  Hedges,  2  Ir.  Ch.,  N. 
receivership  over  the  lessor's  estate,     S.,  370. 
34 


530  RECEIVERS.  [CHAP.  XIV. 

over  the  property  of  a  judgment  debtor,  upon  the  applica- 
tion of  his  creditors,  the  debtor  is  not  entitled  to  interfere 
with  the  receipt  of  rents  after  the  order  of  appointment  is 
made  absolute.1  So  where,  as  under  the  Irish  practice,  the 
functions  of  a  receiver  of  rents  and  profits  of  real  property 
have  reference,  not  only  to  the  future  rents,  but  to  rents 
already  due  and  in  arrears,  a  trustee,  previously  charged  with 
the  management  of  the  estate,  will  not  be  held  responsible  for 
arrearages  of  rent  at  the  date  of  appointment,  since  all  con- 
trol over  and  power  of  collecting  them  are  taken  away  from 
the  trustee  by  the  appointment  of  the  receiver.2 

§  620.  When  a  motion  was  made  that  tenants  of  a  por- 
tion of  the  real  estate  in  controversy  be  required  to  attorn 
to  the  receiver,  and  to  pay  him  their  arrears  of  rent,  which 
was  opposed  by  the  tenants  upon  the  ground  that  an  action 
had  been  brought  against  them  to  recover  the  rent,  which 
was  still  pending,  and  that  if  such  action  should  be  sustained 
they  would,  by  attorning,  subject  themselves  to  payment  of 
the  arrears  twice  over,  the  motion  was  ordered  to  stand  over 
until  the  action  was  tried.  And  the  action  being  tried  and 
plaintiffs  being  nonsuited,  the  motion  to  compel  the  tenants 
to  attorn  was  allowed.  But,  under  the  English  practice, 
costs  were  not  allowed  against  the  tenants  on  granting  such 
a  motion.3 

§  621.  The  service  of  an  order  of  court  upon  tenants,  re- 
quiring them  to  pay  their  rents  to  the  receiver  appointed  in 
the  cause,  attaches  all  rents  then  in  their  hands,  and  all 
thereafter  to  become  due.  And  until  such  order  is  revoked, 
or  set  aside  by  an  order  discharging  the  receiver,  the  tenant 
can  not  rightfully  pay  rent  to  any  person  other  than  the 
receiver,  and  the  death  of  the  receiver  will  not  justify  the 
tenant  in  paying  any  other  person  before  the  appointment 
of  another  receiver.4     But  when  tenants  have  paid  rent 

1  M'Loughlin  v.  Longan,  4  Ir.  Eq.,  3  Hobhouse  v.  Hollcombe,  2  De  G. 
325.  &  Sm.,  208. 

2  McDonnell  v.  White,  11  H.  L.        4  RUSSell  v.  Baker,  1  Hog.,  180. 
Rep.,  570. 


CHAP.  XIV.]  REAL    PROPERTY.  531 

.  properly  due  the  receiver  to  a  third  person,  he  having  no 
authority  or  right  to  receive  it,  it  will  be  treated  as  paid  to 
such  person  for  the  receiver,  and  the  party  entitled  thereto, 
under  the  first  appointment  of  the  receiver,  will  be  allowed 
the  money,  although  the  receiver  has  been  subsequently  ex- 
tended in  behalf  of  another  creditor.1 

§  622.  As  regards  the  receiver's  right  to  distrain  for  un- 
paid rent,  it  is  difficult  to  deduce  any  settled  rule  from  the 
decided  cases,  and  the  decisions  are  far  from  harmonious 
upon  this  subject.  Thus,  it  has  been  held,  when  the  tenant 
has  already  attorned  to  the  receiver,  that  he  may  distrain 
without  obtaining  leave  of  court  for  that  purpose.2  And  it 
lias  been  held,  generally,  that  a  receiver  may  distrain  when- 
ever he  deems  it  necessary,  without  applying  for  leave  of 
court,  since  this  would  in  many  cases  afford  the  tenant  an 
opportunity  to  remove  his  goods  from  the  premises  before 
the  order  could  be  obtained.3  Again,  it  is  said  that  the 
receiver  may  distrain  at  his  own  discretion  for  rent  in  arrear 
within  the  year,  but  if  in  arrear  more  than  a  year,  he  should 
obtain  an  order  of  court  before  distraining.4  If,  however, 
there  is  doubt  as  to  who  has  the  legal  right  to  the  rent  in 
question,  the  receiver  should  obtain  an  order  of  court  before 
proceeding,  since  he  must  distrain  in  the  name  of  the  person 
having  the  legal  right.5  When  permission  is  given  the  re- 
ceiver to  distrain,  it  is  regarded  as  indefinite  in  its  operation, 
and  not  confined  to  any  particular  act  or  time.6  And  it  is 
not  necessary  that  the  receiver  should  first  procure  the  dis- 
charge of  an  order  to  distrain  against  tenants,  before  mov- 
ing the  court  for  leave  to  proceed  in  ejectment  against  the 
tenants  for  non-payment  of  rent.7 

§  623.  When  plaintiff,  after  procuring  the  appointment 
of  a  receiver  in  equity,  still  proceeds  by  action  at  law  con- 

1  O'Callaghan  v.  O'Callaghan,  3  4  Brandon  v.  Brandon,  5  Madd., 

Ir.  Ch.,  N.  S.,  376.  473,  1st  American  Edition,  287. 

2Eaincock  v.   Simpson,  cited  in  5  Pitt  v.  Snowden,  3  Atk.,  750. 

note  to  Shelly  v.  Pelham,  Dick.,  6  Anonymous,  1  Hog.,  335. 

120.  'Sturgeon  v.   Douglas,   1   Hog., 

'Pitt  v.  Snowden,  3  Atk.,  750.  400. 


532  EECEIVEES.  [CHAP.  XIV. 

cerning  the  same  subject-matter,  and  the  receiver  takes  no 
steps  to  restrain  him  from  so  doing,  the  latter  will  not  be 
granted  leave  to  distrain  for  rent  due  from  the  premises 
subject  to  his  receivership.  But  upon  plaintiff  undertaking 
to  proceed  no  further  with  his  action  at  law,  the  receiver's 
application  for  leave  to  distrain  may  be  properly  granted.1 

§  624.  As  a  general  rule,  to  entitle  a  receiver  to  sue  for 
and  recover  rents  accruing  from  property  of  a  debtor  over 
whose  estate  he  is  appointed,  he  must  give  notice  of  his 
appointment  to  the  tenant,  and  without  such  notice  he  can 
not  maintain  an  action  for  the  rent.  The  object  of  the 
notice  is  of  a  twofold  nature:  first,  to  protect  the  estate 
from  payment  to  the  wrong  person,  and  second,  to  prevent 
the  tenant  from  dealing  with  the  former  owner  in  ignorance 
of  the  receiver's  appointment.2 

§  G25.  The  proper  method  of  enforcing  obedience  to  an 
order  of  court  directing  a  tenant  to  pay  rent  to  the  receiver 
is  by  attachment.  And  upon  the  refusal  or  neglect  of  a 
tenant  to  comply  with  such  order,  an  attachment  may  issue 
to  compel  obedience  to  the  mandate  of  the  court.3  But  be- 
fore an  attachment  will  issue  against  a  tenant  for  non-pay- 
ment of  rent  to  the  receiver,  it  should  appear  that  he  has 
been  served  with  an  order  requiring  him  to  make  such  pay- 
ment.4 If,  however,  the  tenant  has  once  paid  his  rent  to 
the  receiver,  a  personal  demand  by  the  receiver  of  the  rent 
due  is  not  necessary  to  lay  the  foundation  for  an  attachment 
against  the  tenant  for  non-payment,  and  a  demand  by  letter 
or  by  a  third  person  is  sufficient.5  And  when,  after  appear- 
ance in  the  action  or  matter  in  which  the  receiver  was  ap- 
pointed, a  party  to  the  cause  interferes  with  the  rents  due 
the  receiver,  an  order  for  an  attachment  against  the  person 
thus  interfering  may  be  made  absolute  in  the  first  instance.6 

§  626.     When  the  receiver  has  obtained  an  order  for  an 

i  Mills  v.  Fry,  19  Ves.,  277 ;  S.  C,  4 Pope  v.  Pope,  2  Hog.,  335. 

Coop.,  107.  s Brown  v.  O'Connor,  2  Hog.,  77. 

2  Hunt  v.  Wolfe,  2  Daly,  298.  6  Thomas  v.  Thomas,  Flan.  &  K., 

"Armstrong  v.  Southwell,  1  Ir.  621. 
Eq.,  32. 


CHAP.  XIV.]  REAL    PROPERTY.  533 

attachment  against  a  tenant  for  non-pa}Tment  of  rent,  this 
order  must  be  discharged  before  the  receiver  can  be  allowed 
to  proceed  by  distress  for  the  collection  of  the  rent.1  So 
when  the  receiver  has  first  proceeded  by  distraint,  the  order 
to  distrain  must  be  discharged  before  he  will  be  allowed  to 
attach.2 

§  627.  The  court  will  not  by  a  proceeding  for  attachment 
against  a  tenant,  for  not  paying  rent  to  the  receiver,  deter- 
mine the  rights  of  a  third  person,  not  a  party  to  the  cause, 
to  whom  the  tenant  has  paid  his  rent.s  And  when  a  person 
has  been  in  possession  of  premises,  paying  rent  therefor  to 
a  receiver  for  several  }Tears,  and  afterward  disputes  his  lia- 
bility to  pay  the  receiver,  on  the  ground  of  holding  under 
another  title,  the  receiver  should  not  proceed  by  attachment 
against  the  tenant,  since  a  question  of  disputed  title  can  not 
be  tried  by  an  attachment  for  contempt,  but  must  be  tried 
in  an  action  at  law  for  that  purpose.4  And  when  a  receiver 
has  received  rent  from  an  assignee  of  the  tenant,  he  can  not 
attach  the  tenant  himself  for  non-payment,  his  only  remedy 
against  him  being  by  proceedings  at  law.5  Nor  will  the 
court  issue  an  attachment  against  a  party  to  the  cause,  for 
non-payment  of  rent  to  the  receiver,  pending  the  total  abate- 
ment of  the  suit  by  the  death  of  the  sole  plaintiff.6 

§  628.  Where,  in  an  action  to  determine  the  right  to  cer- 
tain real  property,  a  receiver  of  the  rents  and  profits  has 
been  appointed,  and  he  is  authorized  by  the  court  to  permit 
the  defendant  to  collect  the  rents  until  further  order,  upon 
giving  bond  with  satisfactory  surety  for  payment  to  the 
receiver  of  all  rents  collected  by  him,  such  order  will  be 
construed  as  merely  regulating  the  receiver's  conduct,  with- 
out affecting  the  rights  of  the  parties.  The  fund  is  regarded 
as  being  still  under  control  of  the  court  as  much  as  before, 
the  receiver  collecting  the  rents  by  proxy  instead  of  in  per- 

1  Nugent  v.  Nugent,  1  Hog.,  169.  *Pread  u#  Lewis,  2  Mol.,  369. 

2 Eyre  v.  Eyre,  1  Hog.,  252.  ^Cane  v.  Bloornfield,  1  Hog.,  345. 

3 Nason  v.  Blennerhassett,  1  Hog.,  G  Brennan  v.  Kenny,  2  Ir.  Ch.,  N. 

402.  S.,  579. 


534  RECEIVERS.  [CHAP.  XIV. 

son,  and  defendant  being  simply  the  receiver's  agent,  for 
the  benefit  of  the  fund  under  control  of  the  court.  An 
appeal,  therefore,  Avill  not  he  from  such  an  order,  since  it 
does  not  affect  the  rights  of  the  parties.1 

§  629.  A  receiver  over  real  property  should  not  retain 
the  money  arising  from  rents,  but  should  move  to  have  it 
laid  out  and  invested  for  the  benefit  of  the  parties  entitled 
thereto.2  But  when  a  receiver  is  appointed  of  the  rents  and 
profits  of  real  estate  pendente  lite,  the  court  will  not  usually 
order  him  to  pay  over  or  account  for  the  rents  to  a  person 
claiming  them,  when  the  land  itself  is  not  charged  with 
payment  of  the  demand.  And  claimants  must,  therefore, 
to  entitle  themselves  to  the  rents  and  profits  at  the  receiver's 
hands,  show  that  they  had  a  right  to  proceed  against  the 
laud  itself  for  satisfaction  of  their  demands.3 

§  630.  In  New  Jersey,  it  is  held  that  the  statute  author- 
izing the  appointment  of  receivers  over  insolvent  corpora- 
tions, and  the  appointment  under  the  statute,  operate  as  a 
conveyance  of  all  the  corporate  property  to  the  receiver,  for 
the  benefit  of  creditors,  and  to  be  distributed  in  accordance 
with  the  statute.  It  is  held,  therefore,  that  rents  accruing 
from  the  corporate  property  subsequent  to  its  sale  by  the 
receivers  belong  to  the  purchaser  at  such  sale,  while  rents 
accruing  after  the  appointment  and  before  the  sale  belong 
to  the  receivers,  for  the  benefit  of  creditors  of  the  corpora- 
tion.4 

§  631.  "When  a  receiver  of  the  rents  accruing  from  real 
property  has  been  appointed,  and  a  decree  is  subsequently 
made  for  a  sale  of  the  premises,  the  receiver  will  be  contin- 
ued until  the  conveyances  are  executed,  in  order  to  collect 

i  Garr  v.  Hill,  1  Halst.  Ch.,  639.  3  city  of  Baltimore  v.  Chase,  2  G. 

2 Foster  v.  Foster,  2  Bro.  C.  C.,  &  J.,  376. 

616.     See,  as  to  liability  of  a  re-  4Corrigan  v.  Trenton  Delaware 

ceiver  of  rents  and  profits  of  realty  Falls  Co.,  3  Halst.  Ch.,  489.     See, 

to  account,  who  has  been  appointed  also,   Fish  v.  Potts,  4  Halst.  Ch., 

by  agreement  of  the  parties,  Ford  277,  affirmed  on  appeal,   id.,  909, 

v.  Rackham,  17  Beav.,  485.  upon  the  question  of  rents  in  such 

case. 


CHAP.  XIV.]  REAL    PROPERTY.  535 

arrears  of  rent,  and  the  tenants  will  be  compelled  to  pay 
arrears  to  the  receiver.1 

§  632.  The  primary  duty  of  a  receiver  of  leasehold 
premises  is  to  pay  the  head-rent,  or  principal  rent  due  to  the 
landlord  of  the  premises,  and  this  he  is  bound  to  do  without 
any  special  order  of  court  to  that  effect,  and  without  com- 
pelling the  landlord  to  resort  to  any  proceedings  for  the 
purpose  of  enforcing  payment.2 

§  633.  Upon  the  question  of  the  receiver's  right  to  make 
repairs,  after  recovery  of  the  premises  in  ejectment,  it  has 
been  held  unnecessary  for  him  to  first  apply  for  leave  of 
court  to  expend  a  part  of  the  fund  in  his  hands  for  repairs, 
prior  to  letting  the  premises ;  but  that  he  is  warranted  in 
the  first  instance  in  laying  out  what  he  may  deem  necessary 
for  repairs,  and  his  disbursements,  if  reasonable  and  proper, 
will  be  allowed  in  passing  his  accounts.3  But  in  an  early 
English  case,  upon  a  bill  by  an  administrator  against  a  tenant 
for  life,  praying  a  decree  that  the  tenant  for  life  in  posses- 
sion should  repair  the  premises,  or  that  a  receiver  be  ap- 
pointed with  directions  to  repair,  the  master  of  the  rolls 
refused  the  relief  on  the  ground  that  there  was  no  precedent 
for  such  an  exercise  of  jurisdiction.4 

§  634.  Under  the  Irish  chancery  practice,  the  appropriate 
course  for  a  receiver  to  adopt,  when  waste  is  committed  on 
lands  subject  to  his  control,  is  to  apply  to  the  court  for  a 
reference  to  a  master,  to  inquire  and  report  what  proceedings 
shall  be  taken  by  the  receiver  touching  the  waste.  Or,  if 
the  case  is  so  pressing  as  to  admit  of  no  delay,  he  may  file 
a  bill  for  an  injunction  to  stay  Avaste,  and,  at  the  same  time 
with  moving  for  the  injunction,  he  may  move  for  a  refer- 
ence to  a  master  to  inquire  and  report  whether  it  is  neces- 
sary that  he  should  have  adopted  that  proceeding,  and 
whether  it  shall  be  continued.5    And  the  court  may,  upon 

1  Quin  v.  Holland,  Ca.  temp.  H,  3  Macartney  v.  Walsh,  Hayes,  29, 

295.  note  b. 

-'  Balfe  v.  Blake,  1  Ir.  Ch.,  N.  S.,  *  Wood  v.  Gaynon,  Amb.,  395. 

365;  Walsh  v.  Walsh,   1   Ir.  Eq.,  s  Mangle  v.  Lord  Fingall,  1  Hog., 

209.  142. 


536  RECEIVERS.  [CHAP.  XIV. 

the  receiver's  motion,  grant  a  conditional  order  restraining 
tenants  from  committing  waste,  without  requiring  a  bill  to 
be  filed  for  that  purpose,  leaving  the  case  to  be  decided 
upon  showing  cause  against  the  order.1 

§  G35.  When  a  receiver  is  in  possession  of  real  estate 
under  and  by  virtue  of  his  appointment,  and  proceedings 
are  instituted  in  another  court  by  parties  claiming  a  hen 
upon  the  property,  the  court  appointing  the  receiver  will 
entertain  a  bill  filed  by  him  for  leave  to  sell  the  real  estate 
free  from  all  hens  claimed  by  other  parties,  and  to  have  so 
much  of  the  proceeds  of  the  sale  set  apart  as  shall  be  suffi- 
cient to  pay  the  alleged  liens,  if  they  are  finally  sustained.2 
But  when  a  receiver  is  appointed  over  real  estate  in  an  ac- 
tion for  the  rescission  of  a  contract,  it  is  improper  to  author- 
ize him  to  sell  any  part  of  the  property  in  controversy  for 
the  benefit  of  plaintiff,  before  a  final  hearing  upon  the 
merits.3  A  purchaser,  however,  from  a  receiver,  who  has 
given  his  note  for  the  purchase  money,  having  received  and 
retained  possession  under  the  receiver's  deed,  can  not,  in  the 
absence  of  fraud  or  mistake,  deny  the  validity  of  the  re- 
ceiver's appointment,  in  an  action  brought  against  him  to 
enforce  a  vendor's  lien  for  the  unpaid  purchase  money.4 

§  636.  As  regards  the  rights  acquired  by  a  purchaser  of 
real  property  at  a  receiver's  sale  under  order  of  court,  it  is 
sufficient  for  the  purchaser  to  see  that  there  was  a  suit  in 
which  the  court  appointed  a  receiver  of  the  property ;  that 

1  Cronin  v.  McCarthy,  Flan.  &  receive  the  rents  remains  unques- 
K.,  49.  tioned,  he  has  no  concern  with  the 

2  De  Visser  v.  Blackstone,  6  legal  title  and  can  not  maintain  a 
Blatchf.,  235.  suit  to  set  aside  a  conveyance  al- 

3Esterhmd  v.  Dye,  56  Ga.,  284.  leged  to  have  been  fraudulently 
Under  the  New  York  statute  au-  made  by  the  husband  after  the  re- 
thorizing  a  receiver  in  an  action  by  ceiver  was  appointed,  or  to  set 
a  wife  for  divorce,  it  is  held  that  aside  an  alleged  fraudulent  assign- 
the  receiver  acquires  no  title  to  ment  by  the  husband  of  a  mort- 
property  of  the  defendant,  but  is  gage  received  upon  such  convey- 
only  entitled  to  possession  as  ance,  or  to  restrain  the  foreclosure 
against  the  defendant  and  all  per-  of  such  mortgage.  Foster  v.  Town- 
sons  claiming  under  him.  And  shend,  68  N.  Y. ,  203. 
while  his  right  to  possession  and  to  4  Stelzer  v.  La  Rose,  79  Ind.,  435. 


CHAI\  -XIV.] 


KEAL    PKOPEETY 


ho  was  authorized  by  the  court  to  sell,  and  that  he  sold  in 
pursuance  of  such  authority ;  that  the  sale  was  confirmed 
by  the  court,  and  that  the  deed  accurately  recites  the  prop- 
erty sold.  The  title  then  passes  to  the  purchaser,  and  ho  is 
not  bound  to  inquire  whether  any  errors  occurred  in  the 
action  of  the  court,  or  whether  there  were  any  irregularities 
in  the  action  of  the  receiver.1  The  court  having  properly 
acquired  jurisdiction  of  the  subject-matter,  and  having 
ordered  its  receiver  to  sell  the  real  estate,  no  mere  errors  or 
irregularities  in  the  exercise  of  the  jurisdiction  thus  acquired 
can  affect  the  title  of  a  purchaser  from  the  receiver,  in  a 
collateral  proceeding.  Thus,  when  a  bill  is  filed  in  behalf 
of  creditors  against  an  administrator  to  establish  a  hen  upon 
the  estate  of  the  deceased,  and  on  this  bill  a  decree  is  had 
adjusting  and  fixing  the  rights  of  the  creditors,  removing 
the  administrator  and  appointing  a  receiver  to  wind  up  the 
estate,  the  court  has  full  jurisdiction  to  order  its  receiver  to 


1Koontz  v.  Northern  Bank,  16 
Wal.,  196.  "A  purchaser  under  a 
deed  from  a  receiver,"  say  the 
court,  Mr.  Justice  Field  delivering 
the  opinion,  "is  not  bound  to  ex- 
amine all  the  proceedings  in  the 
case  in  which  the  receiver  is  ap- 
pointed. It  is  sufficient  for  him 
to  see  that  there  is  a  suit  in  equity, 
or  was  one,  in  which  the  court 
appointed  a  receiver  of  property; 
that  such  receiver  was  authorized 
by  the  court  to  sell  the  property ; 
that  a  sale  was  made  under  such 
authority;  that  the  sale  was  con- 
firmed by  the  court,  and  that  the 
deed  accurately  recites  the  property 
or  interest  thus  sold.  If  the  title 
of  the  property  was  vested  in  the 
receiver  by  order  of  the  court,  it 
would  in  that  case  pass  to  the  pur- 
chaser. Ho  is  not  bound  to  inquire 
whether  any  errors  intervened  in 
the  action  of  the  court,  or  irregu- 


larities were  committed  by  the  re- 
ceiver in  the  sale,  any  more  than  a 
purchaser  under  execution  upon  a 
judgment  is  bound  to  look  into  the 
errors  and  irregularities  of  a  court 
on  the  trial  of  the  case,  or  of  the 
officer  in  enforcing  its  process.  If 
the  receiver  in  the  one  case,  or  the 
sheriff  in  the  other,  omit  to  per- 
form his  whole  duty,  by  which  the 
parties  are  injured,  or  commit  any 
fraud  upon  the  court,  and  the 
rights  of  third  parties  have  so  far 
intervened  as  to  prevent  the  court 
from  setting  the  proceedings  aside, 
the  injured  parties  must  seek  their 
remedy  personally  against  those 
officers,  or  on  their  official  bonds. 
The  interest  of  parties  in  the  con- 
troversy will  generally  induce  such 
attention  to  the  proceedings  as  to 
prevent  great  irregularities  from 
occurring,  without  being  brought 
to  the  notice  of  the  court." 


538  RECEIVERS.  [CHAP.  XIV. 

sell  the  realty,  and  his  deed  in  pursuance  of  such  order  will 
convey  a  good  title.  The  court,  in  such  case,  having  prop- 
erly acquired  jurisdiction  for  the  purpose  of  settling  the 
administration  of  the  estate,  retains  its  jurisdiction  until 
the  matter  is  fully  and  properly  adjusted  and  the  property 
sold.1 

§  637.  In  case  of  the  appointment  of  a  receiver  over 
premises  which  are  held  by  a  tenant  under  a  lease,  with 
covenants  against  the  use  of  the  demised  premises  for  a 
particular  purpose,  as  for  a  shop,  on  pain  of  forfeiting  the 
lease  for  a  breach  of  the  covenants,  the  receiver  is  entitled 
to  the  aid  of  an  injunction  to  restrain  the  tenant  from  using 
the  premises  for  the  forbidden  purpose.2 

§  638.  It  is  a  common  practice  for  receivers  in  charge 
of  real  property,  to  apply  to  the  court  for  leave  to  lease  the 
premises  under  their  control.  And  when  an  order  is  sought 
authorizing  the  receiver  to  let  the  property,  it  must  be 
clearly  shown  who  is  in  the  actual  possession,  since  otherwise 
a  party  in  possession  might  be  ejected  without  notice.3  But 
a  receiver  will  not  be  permitted  to  make  a  lease  of  real 
estate  which  will  bind  an  infant  remainder-man.4 

§  638  a.  "When  receivers  enter  into  possession  of  and  re- 
ceive the  rents  of  real  estate  belonging  to  third  persons  not 
parties  to  the  cause,  but  which  had  been  held  by  defendants 
under  lease,  they  may  be  required  by  petition  in  the  cause 
in  which  they  were  appointed  to  pay  to  the  owners  the  rent 
due  thereon.  They  may  also  be  required,  upon  like  petition, 
to  reimburse  such  owners  for  dilapidations  to  the  property, 
the  lease  requiring  the  lessee  to  keep  the  premises  in  the  con- 
dition in  which  they  were  demised.5 

i  Walker  v.  Morris,  14  Ga.,  323.  5  Neate  v.  Pink,  3  Mac.  &  G.,  476, 

2 Mason  v.  Mason,  Flan.  &K.,  429.  affirming  S.  C.,  15  Sim..  450.     But 

3Sealy  v.  Munns,  1  Ir.  Eq.,  332.  see   Brocklebank  v.  East  London 

<Gibbins  v.  Howell,  3  Madd.,  1st  Railway,  12  Ch.  D.,  839. 
American  edition,  242. 


CHAPTEE  XT. 

OF  RECEIVERS  IN  CASES  OF  MORTGAGES. 

I.  Principles  Governing  the  Relief, §  639 

II.  Inadequacy  of  Security  and  Insolvency  of  Mortgagor,       6G6 
III.  Receivers  as  Between  Different  Mortgagees,  ....       679 


I.  Principles  Governing  the  Belief. 

639.  The  jurisdiction  well  established,  but  cautiously  exercised ;  strong 

grounds  must  be  shown. 

640.  English  rule  denying  receiver  to  mortgagee  having  legal  title 

and  right  to  possession ;  recognized  in  this  country. 

641.  Mortgagee  having  legal  estate  may  have  receiver  if  unable  to 

take  possession ;  mortgage  executed  by  one  as  surety ;  refusal 

of  trustee. 
641  a.  When  receiver  refused. 
643.    Rents  and  profits  pendente  lite;  receiver  refused  when  security 

adequate ;  refused  when  mortgage  not  yet  due. 

643.  When  mortgagee  entitled  to  receiver  of  rents  and  profits ;  mort- 

gagee's right  to  rents  as  against  assignee  in  bankruptcy ;  past- 
due  rents. 

644.  Equitable  hen  of  mortgagee  upon  unpaid  rents. 

645.  Loss  by  embezzlement  or  waste  on  part  of  receiver. 

646.  Receiver  of  ci'ops pendente  lite;  right  to  severed  crops. 

647.  Mortgages  of  chattels. 

648.  Receivers  allowed  over  mortgaged  premises  in  foreign  country. 

649.  Relief  granted  to  secure  interest  alone ;  payments  of  interest  by 

receiver  to  mortgagee,  effect  of. 

650.  Receiver  the  representative  of  all  parties  in  interest ;  the  rule  ap- 

plied to  corporation  in  bankruptcy. 

651.  Duties  of  mortgagee  appointed  receiver ;  order  to  lease  premises, 

when  revoked. 

652.  Mortgagee  authorized  by  mortgagor  to  appoint  receiver;  status 

of  receiver  thus  appointed ;  statute  of  Victoria  authorizing  re- 
ceivers when  mortgage  is  in  arrears. 

653.  Receiver  not  allowed  in  contravention  of  statute ;  statute  pro- 

hibiting sale  of  soldier's  property. 


5i0  EECEIVEKS.  [CHAP.  XV. 

§  654.  When  appointed  in  behalf  of  mortgagor ;  possession  of  mortga- 
gee rarely  interfered  with;  relief  refused  on  creditor's  bill 
against  debtor  and  mortgagee. 

655.  When  receiver  allowed  after  decree. 

656.  Receiver  appointed  in  suit  to  execute  trusts  of  mortgagor's  will, 

how  discharged ;  mortgagor  not  entitled  to  accruing  rents  after 
discharge. 

657.  Mortgagor's  right  to  discharge  of  receiver  on  payment  of  indebt- 

edness. 

658.  Equitable  mortgages;  deposit  of  deeds  as  mortgage;  municipal 

loans  secured  on  rates  and  assessments. 

659.  Liquidator  of  corporation  appointed  receiver  in  behalf  of  equi- 

table mortgagee. 

660.  Application  should  show  who  is  in  possession ;  amount  due  should 

be  shown. 
6G1.     Receivers  in  foreclosure  of  railway  mortgages. 

662.  Receiver  appointed  in  aid  of  judgment  creditor,  extended  in  be- 

half of  mortgagee. 

663.  Need  not  be  extended  over  whole  estate. 

664.  Defense  of  usury. 

665.  Mortgage  of  leasehold  interest ;  when  appointment  made  ex  parte. 
665  a.  Receiver  allowed  against  administrator  of  mortgagor. 

§  639.  The  jurisdiction  of  equity  by  the  appointment  of 
receivers  over  mortgaged  premises,  for  the  protection  of 
morto-a^ees,  or  in  aid  of  actions  for  the  foreclosure  of  mort- 
gages,  is  well  established,  and  has  long  been  exercised  bv 
courts  of  equity,  both  in  England  and  in  America.  It  is, 
however,  exercised  "with  extreme  caution,  and  the  relief  will 
not  be  allowed  when  other  adequate  remedy  exists,  and 
when  no  imperative  reasons  are  shown  for  this  extraordi- 
nary species  of  relief.1  Stated  in  general  terms,  the  rule  is, 
that  in  actions  for  the  foreclosure  of  mortgages,  equity  will 
not  interfere  by  the  appointment  of  a  receiver  unless  it  is 
clearly  shown  that  the  security  is  inadequate,  or  that  there  is 

'Morrison    v.   Buckner,  Hemp.,  to  the  right  of  a  mortgagee  to  a  re- 

442.     As  to  the  right  to  a  receiver  ceiver  of  the  rents  and  income  of 

in  an  action  to  foreclose  a  mortgage  the  mortgaged  premises  under  the 

under  the  statutes  of  Indiana,  and  Kentucky  code,    see    Douglass  v. 

as  to  the  extent  of  the  receivership  Cline,    12    Bush,   608 ;  Woolley  v. 

and  the  practice  and  procedure,  see  Holt,  14  Bush,  788. 
Hursh  v.  Hursh,  99  Ind.,  500.     As 


CHAP.  XV.]  MORTGAGES.  541 

imminent  danger  of  the  waste,  destruction,  or  removal  of  the 
property.  And  there  must,  in  all  cases,  be  a  strong,  special 
ground  for  the  relief  shown.1  In  other  words,  the  courts 
do  not  interfere  by  a  receiver  as  a  matter  of  course  in  aid 
of  foreclosure  proceedings,  when  it  is  not  alleged  that  there 
will  be  any  deficiency,  and  when  plaintiff  is  at  liberty  to 
obtain  a  decree  of  sale.2  When  the  mortgagor  is  the  holder 
of  the  legal  title  and  entitled  to  the  possession  of  the  mort- 
gaged premises,  his  possession  under  the  legal  estate  will 
not  be  disturbed  by  the  appointment  of  a  receiver,  except 
in  a  clear  case  of  fraud,  or  of  great  danger  to  the  rights  of 
the  mortgagee  if  the  estate  is  not  taken  under  the  protection 
of  the  court.  And  the  court  will  not  interfere  in  behalf  of 
the  mortgagee,  unless  it  clearly  appears  to  be  its  duty  to 
take  charge  of  the  estate  to  protect  a  "  clear,  strong  claim 
against  it."  If,  therefore,  doubt  exists  as  to  the  amount 
actually  due  under  the  mortgage,  and  the  plaintiff's  allega- 
tions of  the  inadequacy  of  the  security  are  denied  by  the 
answer,  the  court  will  not  interfere  with  the  mortgagor's 
possession.3 

§  640.  Under  the  practice  in  the  English  Court  of  Chan- 
cery, a  distinction  was  always  observed,  in  the  appointment 
of  receivers,  between  legal  and  equitable  mortgages,  the 
former  vesting  the  legal  estate  at  once  in  the  mortgagee, 
with  the  right  of  immediate  entry,  and  the  latter  conveying 
no  legal  title,  but  a  mere  equity.  And  while,  as  will  here- 
after be  shown,  the  jurisdiction  has  been  frequently  exer- 
cised in  behalf  of  equitable  mortgagees,4  as,  for  example,  in 
behalf  of  subsequent  mortgagees  where  there  are  several 
incumbrancers,  all  subsequent  to  the  first  being  regarded, 

1  Morrison    v.   Buckner,  Hemp.,  case,  a  receiver  should  be  allowed 

442;  Callanan  v.  Shaw,    19  Iowa,  to  take  possession  of  the  mortga- 

183.  gor's  homestead,  pending  proceed- 

2Hackctt   v.   Snow,  10  Ir.   Eq.,  ings     for     the    foreclosure   of    a 

220.  mortgage  thereon. 

s  Callanan  v.  Shaw,  19  Iowa,  183.  *  See  Meaden  v.  Sealey,  6  Hare, 

And  in  this  case,  grave  doubts  are  020. 
intimated  as  to  whether,  in   any 


542  RECEIVERS.  [CHAP.  XV. 

under  the  English  system,  as  equitable  mortgagees,  yet  the 
rule  is  well  settled  that  a  legal  mortgagee,  *.  e.,  one  hav- 
ing the  legal  estate  with  an  immediate  right  of  entry,  is  not 
entitled  to  the  aid  of  equity  by  the  appointment  of  a  re- 
ceiver.1 The  reason  for  the  rule,  as  stated  by  Lord  Eldon, 
by  whom  it  was  first  firmly  established,  is  found  in  the  fact 
that  the  legal  mortgagee,  being  entitled  to  immediate  pos- 
session, stands  in  no  need  of  the  aid  of  equity,  since  he  can 
at  once  protect  his  interests  by  himself  taking  possession.2 
~Nor  does  the  fact  that  the  tenants  of  the  mortgaged  prem- 
ises are  numerous,  and  that  there  is  difficulty  in  collecting 
the  rents,  vary  the  application  of  the  rule,  and  the  mort- 
gagee, in  such  case,  will  still  be  left  to  his  remedy  by  taking- 
possession.3  The  English  doctrine  has  been  recognized, 
although  not  generally  followed,  in  this  country,  and  it  has 
been  held,  on  a  bill  to  foreclose  a  legal  mortgage  and  for  an 
injunction  and  a  receiver  to  prevent  the  defendant  from  re- 
ceiving the  rents,  that  equity  will  not  interfere  as  against 
the  mortgagor  in  possession,  such  interference  being  re- 
garded as  inconsistent  with  the  established  practice  of  courts 
of  equity.4 

§  6-il.  While,  as  we  have  thus  seen,  a  mortffag'ee  in  En- 
gland,  having  the  legal  estate,  is  not  entitled  to  the  interven- 
tion of  equity  by  the  appointment  of  a  receiver  in  aid  of 
his  foreclosure  suit,  since  he  is  usually  in  a  position  to  take 
possession  himself,  without  the  aid  of  the  court,  yet  if  he  is 
unable  to  take  possession,  the  reason  for  the  rule  fails,  and  he 
may,  in  such  case,  be  entitled  to  the  relief .  Thus,  in  the  case 
of  a  mortgage  executed  by  one  as  surety  to  the  original  in- 
debtedness, in  addition  to  the  mortgage  given  by  the  prin- 
cipal debtor  himself,  and  providing  that  the  mortgagee  shall 
not  have  recourse  to  the  surety's  estate  until  the  estate 

1  Berney  v.  Sewell,  1  Jac.  &  W.,  Lord  Roinilly,  Master  of  the  Rolls, 
647;  Acklandr.  Gravener,  31Beav.,  to  the  same  effect,  in  Ackland  v. 
482 ;  Sturch  v.  Young,  5  Beav.,  557.  Gravener,  31  Beav.,  482. 

2  See  observations  of  Lord  Eldon  3  Sturch  v.  Young,  5  Beav.,  557. 
in  Berney  v.  Sewell,  1  Jac.  &  W.,  4  Oliver  v.  Decatur,  4  Cranch  C. 
647.      See,    also,    observations    of  C,  458. 


chap,  xv.] 


MOETGAGES. 


543 


primarily  charged  shall  prove  an  insufficient  security,  in 
an  action  for  a  foreclosure  by  the  mortgagee,  a  receiver  may 
be  appointed  over  the  surety's  estate.1  So  when  the  mort- 
gagee is  forcibly  prevented  by  the  mortgagor  from  taking 
possession  after  default  in  the  payment  of  principal  and  in- 
terest, the  mortgagee  is  entitled  to  a  receiver.2  And  when 
a  deed  of  trust,  in  the  nature  of  a  mortgage,  authorizes  the 
trustee  to  take  possession  of  the  mortgaged  premises  upon 
default  in  the  payment  of  principal  and  interest,  upon  such 
default  and  the  refusal  of  the  trustee  to  take  possession  at 
the  request  of  the  bondholders  secured  by  the  mortgage,  a 
court  of  equity  may  appoint  a  receiver  upon  a  bill  by  the 
bondholders.  And  in  such  case,  the  relief  may  be  granted 
to  enforce  the  right  to  immediate  possession  of  the  mort- 
gaged premises,  independent  of  any  question  of  loss  or 
depreciation  of  the  property.3 
§  641  a.     Under  the  statutes  of  Michigan,  it  is  held  that 


JAcklandv.  Gravener,  31  Beav., 
482.  Lord  Romilly,  Master  of  the 
Rolls,  observes,  p.  484:  "I  must 
grant  the  receiver  in  this  case, 
■which  is  a  peculiar  one.  The  rule 
undoubtedly  is,  that  where  a  mort- 
gagee files  a  bill  to  foreclose,  if  he 
has  a  legal  estate  and  can  take  pos- 
session at  once  by  ejectment,  this 
court  will  not  grant  him  a  receiver, 
and  for  this  plain  reason:  that  he 
may,  if  he  think  fit,  take  possession 
without  the  help  of  the  court.  It 
is  time  that,  by  taking  possession  as 
mortgagee,  he  is  subject  to  have  the 
account  taken  against  him  with  a 
greater  degree  of  severity  than  any 
other  case,  but  he  is  not  to  gain  the 
advantage  of  having  a  receiver 
when  he  can  take  possession  him- 
self, though  subject  to  all  the  in- 
conveniences which  arise  from  ex- 
ercising that  power.  But,  though 
the  court  refuses  to  grant  the  re- 


ceiver in  cases  where  there  is  no 
question  and  the  mortgagee  can 
take  possession  at  once,  there  being 
no  defense  whatever  to  his  action 
of  ejectment,  still,  if  the  mortgagee 
can  not  take  possession,  as  if,  for 
instance,  there  is  a  prior  mortgagee 
who  refuses  to  take  possession, 
then,  at  the  instance  of  the  second 
mortgagee,  the  court  does  grant  a 
receiver.  In  this  instance,  the  case 
is  peculiar,  for,  though  I  think  the 
legal  estate  is  in  the  plaintiff  by  the 
terms  of  the  deed,  yet  it  contains  a 
proviso  that  the  plaintiff  shall  not 
have  recourse  to  the  surety's  estate, 
or  be  at  liberty  to  sell  it,  until  the 
estate  primarily  charged  shall  prove 
an  insufficient  security." 

2 Truman  v.  Redgrave,  18  Ch.  D., 
547. 

3  Warner  v.  Rising  Fawn  Iron 
Co.,  3  Woods,  514. 


544  RECEIVERS.  [CHAP.  XV. 

the  mortgagor  is  entitled  absolutely  to  possession  until  the 
mortgagee's  title  under  the  foreclosure  becomes  absolute. 
It  is,  therefore,  held  that  the  mortgagee  is  not  entitled  to 
the  rents  pending  a  foreclosure,  or  to  a  receiver  to  collect 
such  rents.1     And  when  the  mortgagee  sells  under  a  power 
of  sale  contained  in  the  mortgage  and  becomes  the  pur- 
chaser, upon  a  bill  by  him  to  remove  uncertainties  as  to  his 
title  and  for  a  confirmation  of  the  sale,  he  can  not  have  a 
receiver  of  the  rents  and  profits,  the  suit  being  in  the  nat- 
ure of  an  action  to  remove  a  cloud  from  the  title,  and  the 
mortgagee  having  a  remedy  at  law  to  recover  possession.2 
So  when  the  mortgage  provides  in  express  terms  that  the 
mortgagor  shall  retain  possession  until  foreclosure,  it  is  error 
to  appoint  a  receiver  in  behalf  of  the  mortgagee  in  a  suit  to 
foreclose,  as  the  consideration  for  a  continuance  of  the  cause 
requested  by  defendant,  when  it  is  not  shown  that  the  relief 
is  necessary  for  the  preservation  of  the  property.3 

§  642.     As  regards  the  rents  and  profits  of  mortgaged 
premises,  pending  an  action  for  a  foreclosure,  the  general 
rule,  in  the  absence  of  any  especial  equities,  is,  that  the 
mortgagee,  as  against  the  mortgagor  in  possession  and  those 
deriving  title  under  him  subsequent  to  the  mortgage,  is  not 
entitled  to  a  receiver  of  the  rents  and  profits  pendente  lite, 
and  a  court  of  equity  will  usually  leave  the  mortgagee  to 
his  action  at  law  to  recover  possession,  and  for  the  rents  and 
profits.4    Where,  therefore,  the  mortgaged  premises  are  an 
adequate   security  for  the  payment  of  the   indebtedness, 
there  is  no  ground  for  the  appointment  of  a  receiver  of  the 
rents  and  profits.     And  in  determining  as  to  the  adequacy 
of  the  security  for  the  purposes  of  an  application  for  a  re- 
ceiver of  the  rents,  the  best  criterion  as  to  the  value  of  the 
security  would  seem  to  be  the  rental  itself.5    It  is  to  be 

iWagar  v.  Stone,  36  Mich..  364;  sChadbourn    v.     Henderson,    2 

Hazeltine    v.    Granger,  44    Mich.,  Baxter,  460. 

503.     See,  also,  Beecher  v.  M.   &  ^  Williams  v.  Robinson,  16  Conn., 

P.  R.  M.  Co.,  40  Mich.,  307.  517. 

-McLean  v.  Presley's    Aduainis-  aShotwell  v.  Smith,  3  Edw.  Ch., 

trator,  56  Ala.,  211.  5SS. 


CHAP.  XV.]  MORTGAGES.  545 

observed,  also,  that  a  receiver  will  not  be  appointed  of  the 
rents  and  profits  when  the  mortgage  indebtedness  is  not  .yet 
due,  and  when  the  mortgagee  has  neglected  to  take  a  pledge 
of  the  rents  and  profits  of  the  whole  premises  to  keep  down 
the  accruing  interest.1  So  the  mortgagee  is  not  entitled  to 
rents  which  have  been  collected  by  a  receiver  in  another 
suit,  notwithstanding  he  may  have  given  notice  to  the  ten- 
ants of  the  receiver  to  attorn  to  him.2  And  when  tho 
mortgagee  files  a  general  creditor's  bill,  for  the  benefit  of 
himself  and  other  creditors,  but  does  not  set  up  his  mort- 
gage or  seek  its  foreclosure,  and  a  receiver  is  appointed,  but 
the  bill  is  afterward  dismissed,  the  mortgagee  is  not  entitled 
to  the  rents  collected  by  such  receiver,  even  though  he 
afterward  files  his  bill  for  a  foreclosure.3 

§  643.  But  when  the  mortgage  is  actually  due,  and  the 
proceeds  of  the  mortgaged  premises  are  not  likely  to  prove 
sufficient  for  the  payment  of  the  debt  and  costs,  and  the 
mortgagor  or  other  person  who  is  personally  liable  for  the 
deficiency  is  insolvent,  the  mortgagee  may  apply  for  a  re- 
ceiver to  secure  the  rents  and  profits  which  have  not  yet 
been  collected.  And  in  this  way  he  may  obtain  a  specific 
lien  upon  the  rents  to  pay  such  deficiency.4  When,  there- 
fore, a  mortgagee,  upon  proceedings  for  a  foreclosure,  ob- 
tains a  receiver  of  the  rents  and  profits,  if  the  amount 
obtained  upon  a  sale  of  the  premises  proves  insufficient  to 
pay  the  mortgage  indebtedness,  he  is  entitled  to  as  much  of 
the  rents  in  the  receiver's  hands  as  will  make  up  the  defi- 
ciency. And  this  is  so,  even  though  the  mortgagor's  rights 
in  the  premises  have  passed  to  his  assignee  in  bankruptcy, 
and  have  been  sold  by  him ;  since  the  mortgagee,  who  pro- 
cures a  receiver  to  be  appointed  for  the  protection  of  his 
lien,  is  entitled  to  the  rents  in  preference  to  the  assignee  or 

iBank  of    Ogdensburgh    v.   Ar-  4Astor  v.  Turner,  11  Paige,  43G. 

nold,  D  Paige,  38.  See,  also,  Post  v.  Doit,  4  Edw.  Ch., 

-Ooddington  v.  Bispham,  36  N.  412;  Lofsky  v.    Maujer,   3  Sandf. 

J.  Eq.,  574.  Ch.,  69. 

a  Scott  v.  Ware,  65  Ala.,  174. 
35 


546  RECEIVERS.  [CHAP.  XV. 

purchaser  at  his  sale.1  But  as  regards  past-due  rents,  the 
receiver  only  acquires  title  to  such  as  remain  unpaid  at  the 
time  of  his  appointment,  and  he  is  not  entitled  to  rents 
which  have  been  collected  by  an  assignee  in  bankruptcy  of 
the  mortgagor  prior  to  the  receivership.2  And  a  mortgagee 
who  procures  a  receiver  in  aid  of  his  foreclosure  proceed- 
ing, thereby  acquires  only  an  equitable  lien  upon  the  unpaid 
rents.  Until  such  appointment,  the  owner  of  the  equity  of 
redemption  is  entitled  to  receive  the  rents  and  can  not  be 
compelled  to  account  for  them,  even  though  the  motion  for 
a  receiver  is  pending  when  such  rents  are  collected.3  But 
in  an  action  brought  by  the  receiver  to  recover  rents,  the 
inadequacy  of  the  mortgage  security  and  the  default  in 
payment  of  the  mortgage  indebtedness  can  not  be  ques- 
tioned by  defendant,  he  having  been  a  party  to  the  suit  in 
which  the  receiver  was  appointed,  and  such  issues  having 
been  determined  in  that  suit  they  will  be  regarded  as  res 
judicata} 

§  6M.  The  lien  thus  obtained  by  a  mortgagee  who  uses 
the  necessary  diligence  in  the  assertion  of  his  rights  is  not 
confined  to  the  rents  actually  paid.  And  when,  upon  the 
maturing  of  the  indebtedness,  the  security  being  inadequate, 
the  mortgagee  files  his  bill  for  a  foreclosure,  and  procures 
the  appointment  of  a  receiver,  he  thereby  obtains  an  equita- 
ble lien  upon  the  unpaid  rents,  and  will  be  entitled  thereto 
to  the  extent  of  any  deficiency  in  the  security.  For  exam- 
ple, when  the  mortgagor,  previous  to  the  foreclosure  suit 
and  the  appointment  of  a  receiver,  conveys  the  premises 
subject  to  the  mortgage,  and  his  grantee  rents  a  portion  of 
the  premises,  receiving  a  note,  secured  by  chattel  mortgage, 
for  the  rent,  the  receiver  in  the  foreclosure  suit  is  entitled 


1  Post  v.  Dorr,  4  Edw.  Ch.,  412.  mortgaged  premises  and  as  to  the 

2  Rider  v.  Vrooman,  12  Hun,  299.  duration  of  such  leases,  see  Sin-eve 

3  Rider  v.  Bagley,  84  N.  Y.,  461.  v.  Hankinson,  34  N.  J.  Eq.,  413. 
As  to  the  right  of  a  receiver  in        4  Goodhue  v.  Daniels,   54  Iowa, 
foreclosure  proceedings  to  lease  the  19. 


chat,  xv.]  mortgages.  547 

to  the  sum  secured  by  the  chattel  mortgage,  it  being  sub- 
ject to  the  equitable  lien  acquired  by  the  mortgagee.1 

§  645.  Upon  the  question  of  the  liability  for  loss  of  rents 
and  profits  after  they  have  come  to  the  hands  of  the  re- 
ceiver, it  was  intimated,  although  not  decided,  in  a  case 
before  Lord  Thurlow,  that  if  a  receiver  is  appointed  upon 
the  application  of  a  mortgagee  or  other  incumbrancer,  and 
he  afterward  embezzles  or  otherwise  wastes  the  rents  and 
profits,  the  loss  should  fall  upon  the  mortgagor.2 

§  646.  A  mortgagee  of  a  growing  crop,  or  his  assignee, 
although  he  may  not  be  authorized  to  appropriate  the  prop- 
erty to  himself,  is  nevertheless  entitled  to  have  it  protected, 
and  may,  therefore,  have  a  receiver  of  the  crop  pending  lit- 
igation concerning  his  rights  under  the  lien  claimed  by  him.s 
But  when  a  receiver  is  appointed  in  behalf  of  a  mortgagee 
to  manage  the  mortgaged  estate  and  receive  the  rents  and 
profits,  he  is  not  entitled,  by  virtue  of  his  appointment,  to 
the  proceeds  of  crops  raised  upon  the  premises  which  have 
been  severed  by  him  and  consigned  to  parties  from  whom 
he  had  received  advances,  the  crops  having  been  removed 
and  consigned  by  the  mortgagor  before  the  receiver  was 
appointed.4  So  the  mortgagor  in  possession  is  entitled  to 
crops  grown  upon  the  premises,  and  if  such  crops  are  sold 
upon  execution  against  him  before  a  receiver  is  appointed 
in  the  foreclosure  suit,  the  receiver  acquires  no  title  thereto 
as  against  the  purchaser.5  And  where  parties  agree  to  be- 
come sureties  for  a  defaulting  debtor,  upon  being  secured 
for  their  liability  by  his  conveying  to  them  certain  real 
estate  in  trust,  with  a  covenant  that  the  crops  and  produce 
of  the  property  shall  be  consigned  to  them  for  a  term  of 

i  Lofsky  v.  Maujer,  3  Sandf.  Ch.,  2gee  observations  of  Lord  Thur- 

69.     As  to  the  right  of  a  mortgagee,  low  in  Rigge  v.  Bowater,  3  Bro.  C. 

through  a  receiver,   to  the  rents  C,  365. 

-collected  by  the  mortgagor  pending  3  Simpson  «.  Robert,  35  Ga.,  180. 

the  foreclosure  suit  and  before  de-  4  Codrington     v.     Johnstone,     1 

cree,  see  Silverman  v.  Northwest-  Beav.,  520. 

era  Mutual  Life  Insurance  Com-  5  Favorite  v.   Deardoff,  84  Ind., 

pany,  5  Bradw.,  124.  555. 


518  EECEIVEES.  [CHAP.  XV. 

years  after  the  reimbursement  of  what  they  may  advance 
as  sureties,  upon  a  bill  filed  against  the  sureties  for  an  ac- 
counting, a  receiver  will  not  be  appointed  when  it  is  not 
shown  that  defendants  have  made  any  oppressive  use  of  the 
deed.1  But  when  the  mortgage  covers  the  rents,  issues  and 
profits  of  the  premises,  and  a  receiver  is  appointed  upon  the 
ground  of  insolvency  of  the  mortgagor  and  inadequacy  of 
the  security,  and  the  receiver  grows  and  harvests  a  crop 
upon  the  premises,  the  proceeds  of  the  sale  of  such,  crop 
may  be  applied  in  payment  of  a  deficiency  due  to  the  mort- 
gagee, the  proceeds  of  the  foreclosure  sale  having  been  in- 
sufficient to  satisfy  the  indebtedness.2 

§  647.  When  a  mortgagee  of  chattels,  who  is  in  posses- 
sion, having  sold  a  part  and  occupying  as  to  the  residue  the 
position  of  trustee  for  other  creditors,  is  about  to  dispose  of 
the  residue  to  the  prejudice  of  a  judgment  creditor  of  the 
mortgagor,  a  receiver  may  be  appointed  of  the  proceeds  of 
the  remaining  property  for  the  better  protection  of  the 
rights  of  all  parties  in  interest.3  And  a  receiver  has  been 
allowed  in  behalf  of  a  mortgagee  of  chattels  which  have 
been  seized  under  writs  of  attachment  which  were  subordi- 
nate to  the  lien  of  the  mortgage,  the  relief  being  necessary 
for  the  prevention  of  waste  and  loss  until  the  rights  of  all 
parties  could  be  determined.4  But  a  receiver  will  not  be 
appointed  in  behalf  of  a  mortgagor  of  chattels,  to  take 
charge  of  the  property  in  the  hands  of  the  mortgagee, 
merely  on  the  ground  of  the  mortgagor's  apprehension  that 
defendant  may  part  with  the  property  to  a  hona  fide  pur- 
chaser, when  he  himself  admits  an  indebtedness  to  be  still 
due  to  the  mortgagee.5  And  in  a  suit  by  a  judgment  cred- 
itor to  set  aside  a  mortgage  executed  by  his  debtor  upon  a 
stock  of  goods,  upon  the  ground  that  it  was  intended  to 

Bunbury  v.  Winter,  1  Jac.  &  3Gouthwaite  v.  Rippon,  8  L.  J., 
W.,  255.  N.  S.  Ch.,  139. 

2  Montgomery  v.  Merrill,  65  Cal. ,  4  Crow  v.  Eecl  Eiver  County  Bank, 
432.  52  Tex.,  362. 

5  Bayaud  v.  Fellows,  28  Barb.,  451. 


CHAP.  XV.]  MORTGAGES.  549 

defraud  creditors,  if  the  fraud  is  denied  by  defendants  a  re- 
ceiver will  not  be  appointed  in  limine,  when  it  is  not  shown 
that  the  mortgagee  is  insolvent  or  unable  to  respond  in  case 
the  mortgage  shall  finally  be  declared  invalid.1  So  when 
plaintiff  sues  to  establish  his  interest  in  personal  property 
covered  by  a  mortgage  and  for  a  sale  of  the  property,  it  is 
not  error  to  refuse  a  receiver  when  defendants  deposit  in 
court  a  sufficient  amount  to  secure  plaintiff  in  whatever 
judgment  he  may  obtain  against  them.2 

§  648.  It  is  not  essential  to  the  exercise  of  the  power  of 
equity  by  the  appointment  of  receivers  over  mortgaged 
property,  that  the  property  itself  should  be  within  the 
jurisdiction  of  the  court,  and  receivers  have  been  appointed, 
in  proper  cases,  although  the  mortgaged  estates  were  in  a 
foreign  country.3  Thus,  a  mortgagee  of  West  Indian  es- 
tates was  appointed  in  England  receiver  of  the  property, 
and  without  requiring  the  usual  security  for  the  faithful 
performance  of  his  trust.4  But  the  court  will  not  interfere, 
in  this  class  of  cases,  when  the  parties  in  interest,  and  who 
really  represent  the  mortgaged  property  in  the  foreign 
country,  are  not  before  the  court  or  within  its  jurisdiction.5 

§  649.  It  would  seem  that  the  aid  of  a  receiver  for  the 
protection  of  a  mortgagee  is  not  limited  to  cases  where  it  is 
necessary  for  the  security  of  the  principal  sum  due,  but 
may,  in  certain  cases,  be  allowed  for  the  purpose  of  securing 

JRheinstein  v.  Bixby,  92  N.  C,  person,  not  a  party  to  the  cause, 

307.  having  a  right  of  action  in  replevin 

2  Welch  v.  Henry,  32  Kan.,  425.  to  recover  the  property,  should  not 
As  to  the  right  of  a  mortgagee  of  be  restricted  by  the  court  to  suing 
chattels  to  a  receiver  under  the  stat-  in  trover,  but  should  be  permitted 
utes  of  Iowa,  and  as  to  the  circum-  to  proceed  with  his  action  of  re- 
stances    which  will    warrant    the  plevin. 

relief,  see  Maish  v.  Bird,  59  Iowa,  3  Davis  v.  Barrett,  13  L.  J.,  N.  S. 

307.     In  Merchants  and  Manufact-  Ch.,  304;  Langford  v.  Langford,  5 

urers  National  Bank  v.  Kent,  Cir-  L.  J.,  N.  S.  Ch.,  60. 

euit  Judge,  43  Mich.,  292,  it  is  held  4  Davis  v.  Barrett,  13  L.  J.,  N.  S. 

that  when  a  receiver   is  allowed  Ch.,  304. 

over  personal  property  in  a  suit  to  5Shaw  v.  Shore,  5  L.  J.,  N.  S.  Ch., 

foreclose  a  chattel  mortgage,  a  third  79. 


550  RECEIVERS.  [CHAP.  XV. 

the  interest  as  well.  Thus,  a  mortgagee  has  been  allowed 
a  receiver  to  keep  down  the  interest  on  his  mortgage,  al- 
though not  entitled  to  a  foreclosure,  he  having  covenanted 
with  the  mortgagor  that  the  principal  of  the  indebtedness 
should  not  be  called  in  until  after  the  mortgagor's  death.1 
With  regard  to  payments  of  interest  to  a  mortgagee  by  a 
receiver  appointed  at  his  instance,  such  payments  are  treated 
as  having  been  made  by  the  mortgagor  himself;  since  the 
receiver,  although  an  officer  of  the  court,  is  not  a  stranger 
to  the  mortgagor,  and  may  be  regarded  as  his  agent  to  the 
extent  of  making  such  payments  of  interest  due.2 

§  650.  It  is  also  to  be  noticed,  with  reference  to  the 
position  and  f mictions  of  a  receiver  appointed  in  aid  of  an 
action  of  foreclosure,  that  he  represents,  not  merely  the 
mortgagees  in  whose  behalf  he  may  have  been  appointed, 
but  is  equally  the  representative  of  all  parties  in  interest. 
And  when  the  mortgagor,  a  corporate  body,  has  been 
thrown  into  bankruptcy,  pending  the  proceedings  for  a 
foreclosure  in  which  the  receiver  was  appointed,  the  receiver 
is  to  be  deemed  as  much  the  representative  of  the  as- 
signees in  bankruptcy  and  the  creditors  and  shareholders  of 
the  corporation,  as  of  the  mortgagees  themselves.  The 
court  will  not,  therefore,  order  a  sale  of  the  property  which 
would  be  in  hostility  to  and  would  dispose  of  the  rights  of 
those  interested  in  the  equity  of  redemption,  since  such  a 
sale  would  be  directly  hostile  to  the  rights  of  the  receiver 
who  holds  possession  for  them.3 

§  651.  Again,  when  the  person  selected  for  the  office  of 
receiver  also  occupies  other  and  different  relations  toward  the 
mortgaged  property,  his  functions  and  duties  as  receiver  are 
considered  as  paramount  to  all  others.     For  example,  when 

1  Burrowes  v.  Molloy,  2  Jo.  &  Ship  Canal  R.  &  I.  Co.,  9  Bank. 
Lat.,  521;  S.  C,  8  Ir.  Eq.,  482.  Reg.,  307.  As  to  the  right  to  the 
And  see  Newman  v.  Newman,  cited  rents  of  mortgaged  premises  as  be- 
in  2  Bro.  C.  C,  92,  note  6.  tween  a  receiver  in  a  foreclosure 

2Chinnery  v.   Evans,   11  H.   L.  suit  and  an  assignee  in  bankruptcy 

Rep.,  115.  of  the  mortgagor,  see    Hayes   v. 

3  Sutherland    v.    Lake    Superior  Dickinson,  9  Hun,  277. 


CHAP.  XV.]  MORTGAGES.  551 

a  mortgagee  of  property,  occupying  the  position  of  a  trustee 
of  the  equity  of  redemption,  is  also  appointed  receiver  of 
the  mortgaged  premises  and  accepts  of  the  trust,  his  rela- 
tions and  interest  as  mortgagee  will  not  be  permitted  to  in- 
terfere with  his  duties  as  receiver,  nor  with  the  purposes  or 
interests  for  which  he  was  appointed.  In  such  case,  it  is  his 
plain  duty  as  receiver  to  increase  the  surplus  revenues  of  the 
property,  beyond  what  may  be  found  due  to  him  as  mort- 
gagee, by  obtaining  the  largest  possible  rental.  And  upon  his 
application  to  the  court  for  authority  to  lease  the  mortgaged 
premises,  it  is  his  duty  to  lay  before  the  court  all  the  infor- 
mation within  his  possession,  or  which  by  reasonable  dili- 
gence he  might  acquire,  as  to  the  situation  and  value  of  the 
property.  And  when  he  has  been  ordered  by  the  court, 
upon  his  own  application,  to  lease  the  premises  to  a  partic- 
ular person,  but  it  is  afterward  apparent  that  the  application 
was  not  made  by  him  in  good  faith,  and  that  he  was  con- 
trolled by  a  motive  and  purpose  inconsistent  with  his  duties 
as  receiver,  the  order  Avill  be  reversed.1 

S  652.  There  are  some  cases  to  be  met  with  in  the  Enp-- 
lish  reports,  where  the  mortgagor  has  covenanted  with  and 
authorized  the  mortgagee  to  appoint  a  receiver,  in  case  of 
default,  of  the  rents  and  proceeds  of  the  mortgage  estate, 
for  the  better  security  of  the  mortgage  debt  and  the  inter- 
est thereon,  and  where  the  mortgagor  has  attorned  to  the 
receiver  thus  appointed.2  In  such  cases,  it  would  seem  that 
the  receiver,  being  appointed  by  the  mortgagee  under  the 
power  contained  in  the  mortgage,  is  in  possession  of  the 
premises  as  agent,  not  of  the  mortgagee,  but  of  the  mort- 
gagor; since  the  mortgagee  himself  acts  in  the  capacity  and 
sustains  the  relation  of  agent  of  the  mortgagor  in  making 
the  appointment.3     And  where  the  mortgagor  attorns  to 

iBollesv.  Duff,  54  Barb.,  215;  S.  3 See  opinion  of  Rolt,  L.  J.,  in 

C.,  37  How.  Pi\,  162.  Law  v.  Glenn,  L.  R.,  2  Ch.  App., 

2  See  Jolly  v.  Arbuthnot,  4  DeG.  634;  Jefferys  v.  Dickson,  L.  R.,  1 

&  J.,  224;  Jefferys  v.  Dickson,  L.  Ch.  App.,  183. 
R..  1  Ch.  App.,  183;  Law  v.  Glenn, 
L.  R.,  2  Ch.  App.,  634. 


552 


RECEIVERS. 


[chap.  XV. 


the  receiver,  the  relation  of  landlord  and  tenant  would 
seem  to  be  established  between  them.1  The  practice  of  thus 
providing  in  the  mortgage  itself  for  a  receiver,  in  case  of 
default  by  the  mortgagor,  seems  to  have  been  quite  preva- 
lent in  England,  and  doubtless  gave  rise  to  the  important 
statute  of  23d  and  24th  Victoria,  which  provides  that  mort- 
gagees may  have  receivers  of  the  mortgaged  premises  in  all 
cases  when  the  payment  of  principal  is  in  arrear  one  year, 
or  the  interest  six  months,  or  after  any  omission  to  pay  any 
premium  or  insurance  due  upon  the  property.  The  receiver 
thus  appointed  is  deemed  the  agent  of  the  person  entitled 
to  the  property  subject  to  the  mortgage,  who  is  solely  re- 
sponsible for  his  conduct,  and  the  statute  regulates  the  man- 
ner of  appointment  and  removal,  as  well  as  the  various 
functions  and  duties  of  this  class  of  receivers.2 


1  Jefferys  v.  Dickson,  L.  R.,  1  Ch. 
App.,  183. 

2  This  important  statute,  23  &  24 
Victoria,  ch.  CXLV.  (August  28, 
1860),  100  English  Statutes  at 
Large,  p.  782,  provides  as  follows : 

"XI.  Where  any  principal 
money  is  secured  or  charged  by 
deed  on  any  hereditaments  of  any 
tenure,  or  on  any  interest  therein, 
the  person  to  whom  such  money 
shall  for  the  time  being  be  payable, 
his  executors,  administrators  and 
assigns,  shall  at  any  time  after  the 
expiration  of  one  year  from  the 
time  when  such  principal  money 
shall  have  become  payable  accord- 
ing to  the  terms  of  the  deed,  or 
after  any  interest  on  such  principal 
money  shall  have  been  in  arrear  for 
six  months,  or  after  any  omission 
to  pay  any  premium  on  any  insur- 
ance which,  by  the  terms  of  the 
deed,  ought  to  be  paid  by  the  per- 
son entitled  to  the  property  subject 
to  the  charge,  have  the  following 
powers,  to  the  same  extent  (but  no 


more),  as  if  they  had  been  in  terms 
conferred  by  the  person  creating 
the  charge,  namely :    .     . 

"3d.  A  power  to  appoint  or  ob- 
tain the  appointment  of  a  receiver 
of  the  rents  and  profits  of  the  whole 
or  any  part  of  the  property  in  man- 
ner hereinafter  mentioned.     .     . 

"  XVII.  Any  person  entitled  to 
appoint  or  obtain  the  appointment 
of  a  receiver  as  aforesaid  may,  from 
time  to  time,  if  any  person  or  per- 
sons has  or  have  been  named  in  the 
deed  of  charge  for  that  purpose, 
appoint  such  person,  or  any  one  of 
such  persons,  to  be  receiver,  or  if 
no  person  be  so  nair«d,  then  may, 
by  writing  delivered  to  the  jDerson 
or  any  one  of  the  persons  entitled 
to  the  property  subject  to  the 
charge,  or  affixed  on  some  conspic- 
uous part  of  the  property,  require 
such  last-mentioned  person  or  per- 
sons to  appoint  a  fit  and  proper 
person  as  receiver,  and  if  no  such 
appointment  be  made  within  ten 
days  after  such  requisition,  then 


CHAP.  XV.] 


MORTGAGES. 


55J 


§  G53.  A  receiver  will  not  be  appointed  over  mortgaged 
premises  in  contravention  of  the  spirit  and  purpose  of  a 
legislative  enactment  which  prohibits  the  sale  of  a  certain 


may,  in  writing,  appoint  any  per- 
son he  may  think  fit. 

"XVIII.  Every  receiver  ap- 
pointed as  aforesaid  shall  be 
deemed  to  be  the  agent  of  the  per- 
son entitled  to  the  property  subject 
to  the  charge,  who  shall  be  solely 
responsible  for  his  acts  or  defaults, 
unless  otherwise  provided  for  in 
the  charge. 

"  XIX.  Every  receiver  ap- 
pointed as  aforesaid  shall  have 
power  to  demand  and  recover  and 
give  effectual  receipts  for  all  the 
rents,  issues  and  profits  of  the 
property  of  which  he  is  appointed 
receiver  by  action,  suit,  distress  or 
otherwise,  in  the  name  either  of 
the  person  entitled  to  the  property 
subject  to  the  charge,  or  of  the 
person  entitled  to  the  money  se- 
cured by  the  charge,  to  the  full 
extent  of  the  estate  or  interest 
which  the  person  who  created  the 
charge  had  power  to  dispose  of. 

"XX.  Every  receiver  appointed 
as  aforesaid  may  be  removed  by 
the  like  authority  or  on  the  like 
requisition  as  before  provided,  with 
respect  to  the  original  appointment 
of  a  receiver,  and  new  receivers 
may  be  appointed  from  time  to 
time. 

' '  XXI.  Every  receiver  appointed 
as  aforesaid  shall  be  entitled  to  re- 
tain out  of  any  money  received  by 
him,  in  lieu  of  all  costs,  charges 
and  expenses  whatsoever,  such  a 
commission,  not  exceeding  five  j>er 
centum  on  the  gross  amount  of  all 
money  received,  as  shall  be  speci- 
fied in  his  appointment,  and  if  no 


amount  shall  be  so  specified,  then 
five  psr  centum  on  such  gross 
amount. 

"XXII.  Every  receiver  ap- 
pointed as  aforesaid  shall,  if  so 
directed  in  writing  by  the  person 
entitled  to  the  money  secured  by 
the  charge,  insure  and  keep  in- 
sured from  loss  or  damage  by  fire, 
out  of  the  money  received  by  him, 
the  whole  or  any  part  of  the  prop- 
erty included  in  the  charge 
(whether  affixed  to  the  freehold  or 
not),  which  is  in  its  nature  insur- 
able. 

"  XXIII.  Every  receiver  ap- 
pointed as  aforesaid  shall  pay  and 
apply  all  the  money  received  by 
him  in  the  first  place  in  discharge 
of  all  taxes,  rates  and  assessments 
whatsoever,  and  in  payment  of  his 
commission  as  aforesaid,  and  of 
the  premiums  on  the  insurances,  if 
any,  and  in  the  next  place,  in  pay- 
ment of  all  the  interest  accruing 
due  in  respect  of  any  principal 
money  then  charged  on  the  prop- 
erty over  which  he  is  receiver,  or 
on  any  part  thereof,  and  subject,  as 
aforesaid,  shall  pay  all  the  residue 
of  such  money  to  the  person  for 
the  time  being  entitled  to  the  prop- 
erty subject  to  the  charge,  his  ex- 
ecutors, administrators  or  assigns. 

"  XXIV.  The  powers  and  pro- 
visions contained  in  this  part  of 
this  act  relate  only  to  mortgages 
or  charges  made  to  secure  money 
advanced  or  to  be  advanced  by  way 
of  loan,  or  to  secure  an  existing  or 
future  debt." 


554  RECEIVERS.  [CHAP.  XV. 

class  of  mortgaged  property.  Thus,  where  a  statute  of  the 
state  provides  that  the  property  of  volunteer  soldiers,  in 
the  military  service  of  the  United  States,  shall  be  exempt 
from  levy  and  sale  under  or  by  virtue  of  any  deed  of  trust 
or  mortgage,  or  by  virtue  of  any  execution  or  order  of  sale 
issued  on  any  judgment  or  decree,  plaintiffs  in  a  foreclosure 
suit,  who  obtain  judgment  of  foreclosure  against  the  prop- 
erty of  such  a  soldier,  are  not  entitled  to  a  receiver  to  take 
charge  of  the  property  and  receive  the  rents  and  profits, 
since  this  would  be,  in  effect,  an  infraction  of  the  spirit  and 
object  of  the  statute.1 

§  654.  A  receiver  has  been  appointed,  at  the  instance  of 
one  of  several  mortgagors,  to  keep  down  the  interest  on 
the  incumbrance,  although  the  mortgagee  opposed  the  ap- 
plication, where  he  had  not  taken  possession  of  the  premises 
under  the  mortgage.2  But  when  a  mortgagee  is  in  possession 
of  the  premises  under  the  mortgage,  the  courts  interfere 
with  such  possession  with  great  reluctance,  and  will  not 
extend  their  aid  by  appointing  a  receiver,  unless  in  cases  of 
fraud  or  of  imminent  danger.3  And  when  a  debtor  has 
mortgaged  certain  property  for  the  security  of  his  creditors, 
and  the  mortgagee  is  in  possession  and  proceeding  properly 
in  the  discharge  of  his  trust,  selling  the  property  and  apply- 
ing the  proceeds  in  payment  of  the  indebtedness,  a  receiver 
will  not  be  be  appointed  to  divest  him  of  the  possession, 
upon  a  creditor's  bill  filed  against  the  debtor  and  mort- 
gagee.4 

§  655.  While  receivers  in  aid  of  actions  for  the  fore- 
closure of  mortgages  are  usually  applied  for  and  obtained 
before  final  decree  of  foreclosure,  yet  in  cases  of  emergency 
it  is  competent  for  the  court  to  entertain  an  application  and 
appoint  a  receiver  after  final  decree,  when  great  injury 
might  result  from  withholding  the  relief.5    And  while  the 

1  Adair  v.  Wright,  16  Iowa,  385.  *  Furlong  v.  Edwards,  3  Md.,  99. 

2  Newman  v.  Newman,  cited  in  2  5  Thomas  v.  Da  vies,  11  Beav.,  29 ; 
Bro.  C.  C,  92,  note  6.  Haas  v.  Chicago  Building  Society, 

3  Furlong  v.  Edwards,  3  Md.,  99.  89  111.,  498;  Connelly  v.  Dickson, 


CHAP.  XV.J  MORTGAGES.  555 

power  to  grant  the  relief,  after  decree  and  pending  the 
statutory  period  of  redemption  from  foreclosure  sales,  is  one 
which  is  to  be  exercised  with  extreme  caution,  its  existence 
is  well  established,  and  circumstances  of  fraud  and  bad 
faith  upon  the  part  of  the  mortgagor,  coupled  with  his 
insolvency  and  the  inadequacy  of  the  security,  may  justify 
the  court  in  the  exercise  of  the  power.  Indeed,  the  neces- 
sity for  appropriating  the  rents  to  the  payment  of  the 
mortgage  debt  by  the  aid  of  a  receiver  may  frequently  not 
appear  until  after  a  decree  of  sale,  since  the  amount  of  the 
mortgage  debt  is  often  disputed  and  can  only  be  determined 
by  final  decree,  and  the  amount  for  which  the  premises  will 
sell  can  only  be  ascertained  with  certainty  hy  the  sale  itself.1 
So  a  receiver  of  the  rents  of  the  mortgaged  property  has 
been  allowed,  after  decree  of  foreclosure,  as  against  a  tenant 
in  possession  for  more  than  nineteen  years,  but  who  was  not 
a  party  to  the  suit,  the  exigency  of  the  case  requiring  the 
interposition  of  the  court  to  prevent  the  tenant  in  posses- 
sion from  setting  up  his  adverse  possession  for  twenty  years.2 
And  pending  an  appeal  from  a  judgment  of  foreclosure,  a 
receiver  has  been  appointed  when  it  was  shown  that  the 
premises  were  an  inadequate  security,  that  the  mortgagor 
had  died  insolvent,  that  the  rents  were  being  misappropri- 
ated, and  that  the  premises  had  been  sold  for  unpaid  taxes.3 
So  when  an  appeal  is  prosecuted  in  forma  pauperis  from  a 
decree  of  foreclosure,  a  receiver  may  be  allowed,  the  secu- 
rity being  inadequate.4   And  the  relief  is  proper  after  decree 

TG   Ind.,  440;    Brinkman  v.   Eitz-  But  see  Hoge  v.  Hollister,  8  Baxter, 

inger,   82  Ind.,  358;    Schreiber  v.  533.      And  in  Indiana,   the  relief 

Carey,   48  Wis.,   208;    Bidwell   v.  has  been  granted  after  a  sale  under 

Paul,  5  Baxter,  693.  And  see  Smith  foreclosure,  when  the  premises  were 

v.  Tiffany,  13  Hun,  671.  in  possession  of  a  tenant  who  had 

!Haas  v.  Chicago  Building  So-  failed  to  pay  rent  and  the  mort- 

ciety,  89  111.,  498.    See,  also,  Schrei-  gagor  was  insolvent  and  unable  to 

ber  v.  Carey,  48  Wis.,  208.  redeem  from  the  sale,  the   rents 

2  Thomas  v.  Davies,  11  Beav.,  29.  collected  by  the  receiver  to  be  paid 

3  Brinkman  v.  Ritzinger,  82  Ind.,  to  the  mortgagor  should  he  redeem, 
358.  but  otherwise  to  the    mortgagee, 

4  Bidwell  v.  Paul,  5  Baxter,  693.  the  premises  having  been  sold  for  a 


556  RECEIVERS.  [CHAP.  XV. 

when  the  mortgagor  has  paid  neither  the  interest  nor  any 
part  of  the  principal,  and  the  property  is  an  inadequate 
security,  the  mortgagor  being  insolvent  and  having  per- 
mitted the  property  to  be  sold  for  unpaid  taxes.1  The 
courts,  however,  proceed  with  extreme  caution  in  granting 
the  relief  after  final  judgment  of  foreclosure,  the  practice 
being  regarded  as  an  unusual  one,  and  only  to  be  enter- 
tained upon  a  strong  showing  of  probable  injury.  And 
when  it  appears  that  the  property  in  question  is  in  a  good 
state  of  preservation,  and  that  it  is  not  being  wasted  and  is 
in  no  need  of  repairs,  a  receiver  will  be  refused  after  decree, 
especially  when  plaintiffs  have  other  and  adequate  security 
for  their  debt  in  an  approved  bond  given  by  defendants  on 
appealing  the  foreclosure  suit.2  So  when  the  mortgagee 
neglects  for  several  years  after  maturity  of  the  indebted- 
ness to  institute  foreclosure  proceedings,  and  after  fore- 
closure decree  he  neglects  for  several  months  to  sell,  and 
afterward  applies  for  a  receiver,  the  emergency  must  be 
great  and  the  necessity  imperative  to  warrant  the  court  in 
interfering.  And  if,  in  such  case,  the  evidence  as  to  the 
inadequacy  of  the  security  is  conflicting,  the  court  will  de- 
cline to  interfere.3  And  upon  a  bill  by  mortgagor  against 
mortgagee  for  redemption  of  the  mortgaged  premises,  after 
a  decree  directing  the  redemption,  the  court  will  not,  on 
the  application  of  defendant  and  without  notice  to  plaintiff, 
direct  the  appointment  of  a  receiver,  such  a  practice  being 
regarded  as  without  precedent  or  authority.4 

§  656.  "When  a  receiver  of  mortgaged  premises  is  ap- 
pointed in  an 'action  to  carry  into  execution  the  trusts  of 
the  mortgagor's  will,  a  mortgagee,  who  was  not  a  party  to 
the  suit,  can  not  divest  the  possession  of  the  receiver,  by 

sum  insufficient  to  satisfy  the  rnort-  471,  as  to  the  effect  of  subsequent 

gage    indebtedness.      Connelly    v.  legislation    in    Indiana    upon    the 

Dickson,  76  Ind.,  440.     See,  also,  point  under  consideration. 

Travelers  Insurance  Co.  v.  Brouse,  1  Schreiber  v.  Carey,  48  Wis.,  208. 

83  Ind.,  62;  Buchanan  v.  Berkshire  2  Adair  v.  Wright,  16  Iowa,  385. 

Life  Insurance  Co.,  96  Ind..  510.  3 Cone  v.  Combs,  5  McCrary,  651. 

But  see  Sheeks  v.  Klotz,  84  Ind.,  ^  Barlow  v.  Gains,  8  Beav.,  329. 


CHAP.  XV.] 


MORTGAGES. 


557 


mere  notice  to  the  tenants  of  the  premises  to  pay  their  rents 
to  him,  his  proper  course,  in  such  case,  being  to  apply  to 
the  court  for  the  discharge  of  the  receiver.  And,  on  the 
granting  of  such  discharge,  the  mortgagor  is  not  entitled  to 
rents  which  have  accrued  during  the  possession  of  the  re- 
ceiver, and  which  have  been  paid  into  court  by  him.1 

§  657.  The  right  of  a  mortgagor,  over  whose  property  a 
receiver  has  been  appointed  in  an  action  for  a  foreclosure,  to 
pay  the  mortgage  indebtedness  and  have  the  receiver  dis- 
charged, is  regarded  as  an  absolute  right,  and  in  no  manner 
dependent  upon  the  discretion  of  the  court.  For  example, 
where,  upon  a  bill  to  foreclose  a  mortgage  given  by  a  railway 
company  to  secure  its  bonds,  a  receiver  has  been  appointed, 
and  has  taken  possession  of  the  road,  if  the  owner  of  the  equity 
of  redemption  offers  to  pay  the  mortgage  debt,  or  as  much 
as  is  due,  upon  condition  that  the  property  be  released  and 
the  receiver  discharged,  the  right  to  the  discharge  is  not  a 
matter  resting  in  the  discretion  of  the  court,  but  is  a  clear 
legal  right,  the  denial  of  which  is  judicial  error.2 


1  Thomas  v.  Brigstocke,  4  Russ., 
64. 

2  Milwaukee  &  Minnesota  R.  Co. 
v.  Soutter,  2  Wat,  510.  See  S.  C, 
Wool  worth's  C.  C,  49.  The  doc- 
trine is  stated  by  Mr.  Justice  Miller 
in  the  opinion  of  the  court,  in 
2  Wal.,  at  p.  521,  as  follows:  "The 
complainants  are  seeking  a  fore- 
closure of  a  mortgage  with  a  view 
to  make  their  debt.  The  owner  of 
the  equity  of  redemption  in  the 
mortgaged  premises  comes  forward 
and  offers  to  pay  this  debt,  or  all  of 
it  that  is  due,  provided  his  prop- 
erty, which  is  in  the  custody  of  the 
court,  shall  then  be  restored  to  his 
possession.  The  right  of  the  owner 
to  this  order  is,  under  ordinary  cir- 
cumstances, very  clear,  and  a  re- 
fusal by  the  court  to  give  him  this 
right  would  seem  to  call  for  the 


revisory  power  of  this  court,  when 
the  whole  case  is  before  it  on  the 
record  brought  here  by  appeal 
from  a  final  decree.  The  only 
doubt  which  the  court  could  have 
on  the  question  arises  from  the 
principle  that  the  appointment  and 
discharge  of  a  receiver  are  ordi- 
narily matters  of  discretion  in  the 
circuit  court,  with  which  this  court 
will  not  interfere.  As  a  general 
rule,  this  proposition  is  not  denied. 
But  we  do  not  think  it  applicable 
to  the  case  before  us.  While  the 
parties  to  this  suit  were  fiercely 
litigating  the  amount  of  the  mort- 
gage debt,  and  questions  of  fraud 
in  the  origin  of  that  debt,  the  ap- 
pointment or  the  discharge  of  a 
receiver  for  the  mortgaged  prop- 
erty very  properly  belonged  to  the 
discretion  of  the  court  in  which  the 


55S  KECEIVERS.  [CHAP.  XV. 

§  658.  The  jurisdiction  of  equity  to  grant  receivers  over 
mortgaged  premises  is  not  confined  to  cases  where  a  mort- 
gage has  actually  been  executed  between  the  parties,  but 
extends  to  cases  of  equitable  mortgages,  such  as  the  deposit 
of  title  deeds  as  security  for  loans  or  advances.  And  when 
two  tenants  in  common  of  real  estate,  in  equal  moieties,  de- 
posit their  title  deeds  as  security  for  loans  to  one  of  them, 
with  an  agreement  to  execute  a  legal  mortgage  when  re- 
quired, upon  a  bill  by  the  equitable  mortgagee  for  a  fore- 
closure, a  receiver  of  the  rents  and  proceeds  may  be 
appointed.  And  the  relief  may  be  properly  granted  in  such 
a  case,  although  only  one  of  the  defendants  is  before  the 
court,  he  being  in  possession  and  in  receipt  of  the  whole  of 
the  rents.1  But  where  the  authorities  of  a  municipal  cor- 
poration have  been  authorized  by  act  of  parliament  to  levy 
rates  or  assessments  and  to  borrow  money  on  the  security 
thereof,  for  purposes  of  public  improvement,  holders  of  the 
bonds  and  obligations  given  by  the  municipal  officers  for  such 
loans  and  secured  on  such  rates  or  assessments  are  not  en- 
titled to  a  receiver,  when  there  has  been  no  default  in  the 
payment  either  of  principal  or  of  interest.2 

§  659.  When  a  private  corporation  is  being  wound  up 
under  the  supervision  of  the  court,  and  a  liquidator  has  been 
placed  in  possession  of  its  effects,  an  equitable  mortgagee, 
on  filing  his  bill  for  an  accounting  of  what  is  due  him,  is 
entitled  to  a  receiver.     And  in  such  case,  the  official  liqui- 

litigation  was  pending.     But  when  it  on  the  facts  in  the  record,  there 

those  questions  had  been    passed  is  no  discretion  in  the  court  to  with- 

upon  by  the  circuit  court,  and  by  hold  it.     A  refusal  is  error,  judicial 

this  court,  also,  on  appeal,  and  the  error,  which  this  court  is  bound  to 

amount  of  the  debt  definitely  fixed  correct  when  the  matter,  as  in  this 

by  this  court,  the  right  of  the  de-  instance,  is  fairly  before  it.     That 

fendant  to  pay  that  sum  and  have  the  order  asked  for  by  appellants 

a  restoration  of    his  property  by  should  have  been  granted  seems  to 

discharge  of  the  receiver  is  clear,  us  very  clear." 

and  does  not  depend  on  the  discre-  '  Holmes  v.  Bell,  2  Beav.,  298. 

tion  of  the  circuit  court.     It  is  a  2  Preston  v.  Corporation  of  Great 

right  which  the  party  can  claim;  Yarmouth,    L.     R.,    7    Ch.    Ap., 

and,  if  he  shows  himself  entitled  to  655. 


CHAP.  XV.]  MORTGAGES.  559 

clator  should  be  appointed,  when  there  is  no  personal  objec- 
tion to  him,  and  it  is  manifest  that  his  appointment  will  be 
a  saving  of  great  expense  in  closing  up  the  affairs  of  the 
corporation.1 

§  660.  The  petition  or  application  for  a  receiver  in  aid  of 
an  action  for  a  foreclosure  should  show  who  is  in  possession 
of  the  premises,  since  the  court  is  only  warranted  in  appoint- 
ing a  receiver  of  mortgaged  premises  when  a  party  to  the 
suit  is  in  possession,  either  by  himself  or  by  his  tenants. 
The  court  must,  therefore,  be  apprised  that  the  person  in 
possession  is  a  defendant  in  the  action,  and  that  he  has  had 
due  notice  of  the  application,  unless  he  is  in  default  for  not 
appearing.2  And  an  additional  reason  for  requiring  the 
application  to  show  A\Tho  is  in  possession  of  the  premises  is 
that  if  a  party  to  the  foreclosure  suit  is  in  possession  by  his 
tenant,  but  the  tenant  is  not  himself  a  party  to  the  litiga- 
tion, his  possession  will  not  be  disturbed  by  the  appoint- 
ment, and  he  will  only  be  directed  to  attorn  to  the  receiver, 
and  to  pay  the  rent  to  him  instead  of  his  former  landlord.3 
And  when  the  plaintiff,  in  an  action  for  the  foreclosure  of 
a  mortgage,  moves  for  a  receiver  upon  a  decree  pro  confesso, 
he  should  show  by  affidavit  the  amount  due  for  principal, 
interest  and  costs,  after  all  just  credits  are  allowed,  and 
that  the  defendant  is  in  possession.4 

§  661.  The  jurisdiction  of  equity  by  appointing  receivers 
over  railways,  in  actions  to  foreclose  mortgages  of  the  corpo- 
rate property,  is  discussed  at  length  in  another  chapter  of 
this  work.5  It  is  sufficient  here  to  remark,  that  while  the 
courts  are  averse  to  taking  possession  of  railway  corpora- 
tions by  a  receiver  in  behalf  of  mortgagees,  unless  a  strong 
case  is  presented,6  they  proceed,  in   the   exercise   of  this 

1  Perry  v.  Oriental  Hotels  Co.,  3  Sea  Insurance  Co.  v.  Stebbins, 
L.   R.,   5  Ch.   Ap.,  420.     But  see    8  Paige,  565. 

Boyle  v.  Bettws  Llantwit  Colliery  4  Rogers  v.   Newton,   2  Ir.  Eq., 

Co.,2Ch.  D.,  726.  40. 

2  Sea  Insurance  Co.  v.  Stebbins,  5  See  cbap.  XI,  ante,  §  370  et  seq. 
8  Paige,  565.  See,  also,  Rogers  v.  6  See  Ruggles  v.  Southern  Minne- 
Newton,  2  Ir.  Eq.,  40.  sota  Railroad,  U.  S.  Circuit  Court, 


5  GO  RECEIVERS.  [CHAP.  XV. 

branch  of  their  jurisdiction,  upon  the  usual  principles  gov- 
erning them  on  applications  for  receivers  in  the  foreclosure 
of  ordinary  mortgages,  and  the  inadequacy  of  the  security 
and  insolvency  of  the  mortgagor  are  regarded  as  sufficient 
grounds  for  the  relief.1 

§  662.  When  a  judgment  creditor  of  the  owner  of  the 
equity  of  redemption  in  mortgaged  premises  has  obtained  a 
receiver  in  aid  of  his  judgment  at  law,  the  mortgagee  may 
have  such  receiver  extended  for  his  protection  under  the 
mortgage,  upon  showing  the  insufficiency  of  the  estate  for 
payment  of  the  mortgage  indebtedness.2 

§  663.  In  appointing  a  receiver  over  mortgaged  premises, 
it  is  not  imperative  upon  the  court  to  extend  the  appoint- 
ment over  the  entire  estate,  and  the  receiver  may  be  limited 
in  the  first  instance  to  such  portion  of  the  lands  as  is  pri- 
marily liable  for  the  payment  of  the  mortgage  indebtedness.3 

§  664.  It  has  been  held,  in  New  York,  in  the  case  of  a 
foreclosure  of  a  mortgage  containing  a  stipulation  that  the 
mortgagees  should  be  entitled,  under  certain  circumstances, 
to  a  receiver,  when  the  defense  alleged  was  usury,  but  the 
usury  was  sworn  to  only  upon  information  and  belief,  that 
the  order  appointing  the  receiver  should  be  affirmed  on 
appeal.4 

§  665.  The  aid  of  a  receiver  is  sometimes  granted  in  an 
action  to  foreclose  a  mortgage  of  a  leasehold  interest  in 
realty.  And  in  such  a  case,  the  relief  may  be  allowed  before 
answer  or  process  against  the  defendant  mortgagor,  upon 
showino-  that  the  landlord  is  threatening  an  eviction  because 
of  the  non-payment  of  rent.5 

District  of  Minnesota,   5  Chicago  ^Tressilian  v-  Caniffe,  4  Ir.  Ch., 

Legal  News,  110.  N.  S.,  399. 

1  Ruggles  v.  Southern  Minnesota  4  Knickerbocker  Life    Insurance 

Railroad,  supra;  Keep  v.  Michigan  Co.  v.  Hill,  5  N.  Y.  S.  C.  (Thomp. 

Lake  Shore  R.  Co.,  U.  S.  Circuit  &  Cook),  694. 

Court,   Western  District  of  Mich-  5  Barrett  v.  Mitchell,  5  Ir.  Eq., 

igan,  6  Chicago  Legal  News,  101.  501. 

2Trye  v.  Earl  of  Aldborough,  1 
Ir.  Ch.,  N.  S.,  6G6. 


CHAP.  XV.]  MORTGAGES.  561 

§  6G5  a.  Under  a  statute  authorizing  the  appointment  of 
a  receiver  in  an  action  of  foreclosure  when  the  mortgaged 
property  is  in  danger  of  being  lost,  removed,  or  materially 
injured,  or  when  the  property  is  probably  insufficient  to  dis- 
charge the  indebtedness,  it  is  proper  to  grant  the  relief  in  a 
foreclosure  suit  brought  against  the  administrator  of  a 
deceased  mortgagor.1 

1  Jacobs  v.  Gibson,  9  Neb.,  380.  gaged  premises  pending  a  fore- 
As  to  the  right  to  an  appeal  and  closure  in  Wisconsin,  see  North- 
stay  of  proceedings  from  an  order  western  Mutual  life  Insurance  Co. 
appointing  a  receiver  over  mort-  v.  Park  Hotel  Co.,  37  Wis.,  125. 


562  RECEIVERS.  [CHAP.  XV. 


II.  Inadequacy  of  Security  and  Insolvency  of  Mortgagor. 

§  666.     The  general  rule  stated. 

667.  Satisfactory  proof  of  inadequacy  and  insolvency  required ;  inad- 

equacy limited  to  pai'ticular  mortgage. 

668.  Grounds  for  receiver  in  Irish  Court  of  Chancery. 

669.  General  rule  not  followed  in  New  Jersey. 

670.  Grounds  of  the  relief  in  New  Jersey ;  fraud,  bad  faith  and  mis- 

management ;  assignment  to  insolvent  person ;  transfer  to  wife 
of  mortgagor. 

671.  The  doctrine  in  Mississippi. 

672.  Unpaid  taxes  and  insurance  as  ground  for  relief ;  contest  as  to 

whether  property  is  covered  by  mortgage. 

673.  The  doctrine  in  Nevada;  when  relief  extended  to  purchasers 

under  foreclosure  sale. 

674.  The  doctrine  in    California;    mortgagee  not  allowed  receiver 

because  of  inadequacy  and  insolvency ;  the  doctrine  in  Iowa. 

675.  When  relief  allowed  although  indebtedness  only  partly  due ;  not 

allowed  when  there  is  doubt  as  to  amount  due,  and  bill  is 
denied  by  answer. 

676.  When  allowed  over  leasehold  premises  mortgaged. 

677.  Possession  by  tenant  of  mortgagor  no  bar  to  relief. 

678.  Bonds  issued  by  canal  company,  when  treated  as  mortgage  and 

receiver  allowed. 
678  a.  When  receiver  allowed  in  behalf  of  wife. 
678  b.  Exemption  of  rents. 

§  66G.  The  principal  ground  on  which  courts  of  equity 
are  called  upon  to  lend  their  extraordinary  aid  by  the 
appointment  of  receivers  over  mortgaged  property,  is  the 
inadequacy  of  the  security  for  the  payment  of  the  mortgage 
indebtedness.  This  inadequacy,  within  the  meaning  of  the 
rules  governing  this  branch  of  the  subject,  consists  of  two 
elements,  viz.,  the  insufficiency  of  the  mortgaged  premises 
per  se  as  a  fund  for  the  payment  of  the  debt,  and  the  insolv- 
ency of  the  mortgagor  or  other  person  primarily  liable  for 
the  indebtedness,  and  whose  duty  it  is  to  make  good  any 
deficiency  in  the  security.  Stated  in  general  terms,  the 
well-established  rule,  deducible  from  the  clear  weight  of 
authority,  is,  that  in  all  cases  where  the  rents  of  the  prop- 
erty are  not  specifically  pledged  for  the  security  of  the  debt, 


CHAP.  XV.]  MORTGAGES.  563 

to  entitle  a  mortgagee  to  a  receiver  of  the  mortgaged  prem- 
ises, and  of  the  rents  and  profits,  he  must  show,  first,  that 
the  property  itself  is  an  inadequate  security  for  the  debt 
with  interest  and  costs  of  suit ;  and  second,  that  the  mort- 
gagor or  other  person  who  is  personally  liable  for  the  pay- 
ment is  insolvent,  or  beyond  the  jurisdiction  of  the  court,  or 
of  such  doubtful  responsibility  that  an  execution  against  him 
for  the  deficiency  would  prove  unavailing.  And  this  being 
shown,  the  courts  will  generally  interpose  and  appoint  a  re- 
ceiver.1 And  it  has  been  held  that  the  aid  of  a  receiver 
should  be  granted  or  withheld,  according  as  it  may  or  may 
not  be  an  essential  means  to  pay  the  indebtedness  secured 
by  the  mortgage,  and  there  can  be  no  necessity  for  the 
relief,  if  the  mortgagor  is  solvent  and  able  to  pay  any  de- 
ficiency.2 

§  667.  It  is  to  be  observed  that,  in  the  application  of  the 
rule  as  above  stated,  the  courts  require  satisfactory  proof, 
both  as  to  the  inadequac}^  of  the  security  and  insolvency  of 
the  mortgagor  or  other  person  liable  for  the  debt.  And 
unless  both  these  conditions  are  shown  to  exist,  no  sufficient 

1  Quincy  v.  Cheeseman,  4  Sandf,  class  of  cases,  upon  the   grounds 

Ch.,  405;   Brown  v.  Chase,  Walk,  stated  in  the  text,  is  not  impaired 

(Mich,),    43;    Hyman    v.   Kelly,    1  by  the  code  of  procedure  in  New 

Nev.,    179;    Ruggles    v.    Southern  York.     Hollenbeck  v.  Donnell,  94 

Minnesota  Railroad,  U.  S.  Circuit  N.  Y.,  342,  affirming  S.  C,  29  Hun, 

Court,    District    of    Minnesota,    5  94.     And  see  Herbert  r.  Greene,  3 

Chicago  Legal  News,  110;  Keep  v.  Ir.   Ch,,   N.    S.,   274;    "Warner    v. 

Michigan  Lake  Shore  R.  Co.,  U.  S.  Gouverneur's   Ex'rs,  1   Barb.,   36; 

Circuit  Court,  Western  District  of  Astor  v.  Turner,  2  Barb. ,  444.     But 

Michigan,  6  Chioago  Legal  News,  see,    contra,  Cortleyeu   v.   Hatha- 

101;   Hill  v.   Robertson,   24  Miss.,  way,  3  Stockt. ,  39 ;  Frisbie  v.  Bate- 

368 ;  Sea  Insurance  Co.  v.  Stebbins,  man,  9  C.  E.  Green,  28,  approving 

8  Paige,  565 ;   Schreiber  v.  Carey,  and  following  Best  v.  Scliermier,  2 

48  Wis.,  208;  Commercial  &  Sav-  Halst.  Ch.,  154. 

ings  Bank?'.  Corbett, 5  Sawyer,  172;  2 Myers  v.  Esteil,   48  Miss.,  403. 

Buchanan  v.  Berkshire  Life  Insur-  And  see  this  case  for  an  application 

ance  Co.,  96Ind.,510;  Kerchner  v.  of  the  principles  governing  relief 

Fairley ,   80  N.  C. ,  24 ;  Oldham  v.  by  receivers  in  cases  of  mortgages, 

Bank,  84  N.  C. ,  304.    And  the  juris-  to  cases  of  deeds  of  trust, 
diction  to  appoint  receivers,  in  this 


5G4 


RECEIVERS. 


[chap.  XV. 


cause  is  presented  to  warrant  the  interference  of  equity.1 
When,  therefore,  it  does  not  sufficiently  appear  that  the 
mortgaged  premises  are  an  inadequate  security  for  the  pay- 
ment of  the  indebtedness,  the  relief  will  be  refused,  even 
though  it  is  shown  to  the  satisfaction  of  the  court  that  the 
mortgagor  is  insolvent.2  And  by  inadequacy  of  security, 
within  the  meaning  of  the  rule,  is  to  be  understood  inade- 
quacy as  to  the  particular  mortgage  which  is  being  fore- 
closed, and  not  as  to  other  and  subsequent  mortgages.  If, 
therefore,  the  premises  are  shown  to  be  a  sufficient  security 
for  the  mortgage  which  is  in  process  of  foreclosure,  although 
an  inadequate  security  for  other  and  later  mortgages  and 
liens,  no  sufficient  ground  for  a  receiver  is  presented,  even 
though  the  mortgagor  is  plainly  insolvent  and  unable  to  re- 
spond for  a  deficiency.3    And  the  burden  of  proof  rests 


1  Sea  Insurance  Co.  v.  Stebbins,  8 
Paige,  565 ;  Morris  v.  Branchaud, 
52  Wis.,  187. 

2  Brown  v.  Chase,  "Walk.  (Mich.), 
43.  The  doctrine  is  very  clearly 
stated  in  the  opinion  of  the  court 
in  this  case  as  follows :  "  A  receiver 
of  the  rents  and  profits  of  mort- 
gaged premises  is  sometimes  ap- 
pointed on  the  petition  of  the 
mortgagee,  after  he  has  filed  his 
bill  to  foreclose  the  mortgage.  The 
court  must  be  satisfied,  before  mak- 
ing the  appointment,  that  the 
mortgaged  premises  are  insufficient 
to  pay  the  mortgage  debt,  and  that 
the  mortgagor  or  other  party  to  the 
suit  who  is  personally  Hable  for  its 
payment,  is  insolvent,  or  out  of  the 
jurisdiction  of  the  court,  so  that  an 
execution  against  him  for  the  bal- 
ance that  should  remain  due  after 
the  sale  of  the  mortgaged  premises 
would  be  unavailing.  Chase,  the 
mortgagor,  who  is  personally  liable 
for  the  payment  of  the  debt,  has 
been  decreed  a  bankrupt  on  his  own 


petition.  So  far,  the  complainants 
have  made  out  their  case ;  but  they 
have  failed  to  satisfy  the  court  that 
the  mortgaged  premises  are  insuf- 
ficient to  pay  the  mortgage  debt. 
The  security  was  one  of  their  own 
taking,  and  the  presumption  is  that 
it  is  sufficient,  until  the  contrary 
appears." 

3  Warner  v.  Gouverneur's  Exec- 
utors, 1  Barb.,  36.  "The  rale  in 
these  cases,"  says  Edmonds,  J.,  p. 
38,  "  where  the  mortgagee  has  not 
taken  care  to  keep  down  the  accru- 
ing interest,  by  securing  a  lien  on 
the  rents  and  profits,  is  to  interfere 
with  the  mortgagor's  possession 
prior  to  a  decree  of  foreclosure,  and 
appoint  a  receiver  of  the  rents  and 
profits,  when  the  premises  are  an 
inadequate  security  for  the  debt 
secured  by  the  mortgage,  and  the 
mortgagor,  or  other  person  in  pos- 
session, who  is  personally  hable  for 
the  debt,  is  not  of  sufficient  ability 
to  answer  for  the  deficiency.  In 
this  case,  there  seems  to  be  no  doubt 


CHAP.  XV.]  MOETGAGES.  565 

upon  plaintiff  to  establish  the  inadequacy  of  the  security, 
and  if  he  fails  in  this  the  relief  will  be  denied.1  But  when 
the  income,  rents  and  profits  of  the  premises  are  pledged 
by  the  mortgage,  less  stringency  of  proof  is  required  to 
Avarrant  the  court  in  granting  a  receiver.2  And  when  the 
court  has  appointed  a  receiver  in  a  foreclosure  suit  because 
of  the  inadequacy  of  the  security,  an  appellate  court  will  be 
reluctant  to  disturb  the  finding  of  the  court  below  as  to  the 
fact  of  such  inadequacy.3  If,  however,  only  a  part  of  the 
mortgage  indebtedness  is  due  and  the  premises  are  divisible 
into  two  nearly  equal  parts,  which  may  be  sold  separately 
without  injury,  so  that  the  mortgagee  is  only  entitled  to 
foreclose  as  to  one  of  such  parcels,  he  will  not  be  allowed  a 
receiver  as  to  that  part  of  the  debt  not  yet  due,  or  as  to  that 
portion  of  the  premises  as  to  which  his  right  to  foreclose 
has  not  yet  accrued.4 

§  66S.  Under  the  practice  of  the  Irish  Court  of  Chan- 
cery, in  actions  for  the  foreclosure  of  mortgages,  or  to  raise 
a  charge  affecting  lands  by  sale  thereof,  a  receiver  will  be 
appointed  only  under  the  following  circumstances:  first, 
when  interest  is  due  on  the  security,  the  court  usually  re- 
quiring an  affidavit  that  one  year's  interest  at  least  is  due. 
Secondly,  when  the  property  itself  is  in  danger,  as  if  the 
lands  are  held  under  a  lease,  and  the  rental  due  thereon  has 
been  permitted  to  remain  in  arrears.  Thirdly,  when  there 
is  reason  to  apprehend  that  the  sum  which  may  be  realized 

of  the  mortgagor's  insolvency,  but  adequate  security  for  the  amount 

there  does  seem  to  be  a  good  deal  due  to  them,  the  mortgagor,  on  the 

of  doubt  as  to  the  inadequacy  of  other  hand,  avers  thai  they  are  suf- 

the  security  of  the  mortgaged  prern-  ficient  for  that  amount.     There  is, 

ises.     The  allegation  is,  that  they  therefore,  no  ground   for  the  ap- 

are  not  an  adequate  security  for  '  all  pointment  of  a  receiver." 

just  incumbrances'  on  them.     All  i Burlingame  v.  Parce,    12  Hun, 

of  the  just  incumbrances,  it  would  144. 

seem,  amount  to  near  $70,000,  while  2  Des  Moines  Gas  Co.  v.  West,  44 

the  claim  of  the  defendants  is  not  Iowa,  23. 

more  than  half  that  sum.      And  3Pouder  v.  Tate,  96  Ind.,  330. 

while  the  defendants  do  not  say  ^Hollenbeck  v.    Donnell,    94  N. 

whether  the  premises  are  or  are  not  Y.    342. 


566  RECEIVERS.  [CHAP.  XV. 

upon  a  sale  of  the  lands  will  be  insufficient  to  satisfy  the 
incumbrances  or  charges  thereon.1 

§  669.  Notwithstanding  the  clear  weight  of  authority  in 
support  of  the  rule  as  stated,  allowing  receivers  of  mort- 
gaged premises  in  aid  of  a  foreclosure  when  the  security  is 
inadequate  and  the  mortgagor  insolvent,  the  courts  of  New 
Jersey  were  formerly  averse  to  the  interference  upon  this 
ground,  and  it  was  held  that  the  conditions  mentioned  were 
not  sufficient  cause  for  relief  in  equity  by  a  receiver.2  The 
grounds  upon  which  the  courts  of  that  state  based  their  re- 
fusal to  follow  the  general  rule  were,  that  when  one  takes  a 
mortgage  security  and  permits  the  mortgagor  to  remain  in 
possession,  if  there  is  a  default  in  payment  the  mortgagee 
must  appropriate  the  property  in  the  usual  way  to  the  pay- 
ment of  his  debt.  If  he  has  a  first  mortgage  and  wishes 
possession,  he  must  take  his  legal  remedy  by  ejectment.  If 
he  is  a  second  incumbrancer,  he  takes  his  security  with*  that 
disadvantage.3 

§  670.  The  courts  of  New  Jersey  have,  however,  recog- 
nized other  circumstances,  when  coupled  with  inadequacy 
of  the  security  and  insolvency  of  the  mortgagor,  as  suffi- 
cient foundation  for  relief  in  equity.  And  it  is  laid  down 
as  a  general  doctrine,  that  a  receiver  may  be  allowed  when, 
in  addition  to  the  insolvency  of  the  mortgagor  and  inade- 
quacy of  the  security,  any  act  has  been  done  by  the  mort- 
gagor, or  tenant  in  possession,  which  shows  fraud  or  bad 
faith  in  appropriating  the  rents  and  profits  for  other  pur- 
poses than  keeping  down  the  interest  on  the  incumbrances.4 
So  it  is  said  that  a  receiver  may  be  allowed  if  the  circum- 
stances have  materially  changed  after  the  giving  of  the 
security,  as  if  the  buildings  have  burned  down  or  been  per- 


1  Master  of  the  Rolls  in  Herbert    lowing  Best  v.  Schermier,  2  Halst. 
v.  Greene,  3  Ir.  Ch.,  N.  S.,  274.  Ch.,  154. 

2Cortleyeu    v.     Hathaway,    3        3Cortleyeu      v.      Hathaway,     3 
Stockt.,   39;  Frisbie  v.  Bateman,  9    Stockt,  39. 

C.  E.  Green,  28,  approving  and  f ol-        4  Cortleyeu      v.     Hathaway,     3 

Stockt.,  39. 


CHAP.  XV.]  MORTGAGES.  567 

mitted  to  decay,  or  if  waste  has  been  committed,  or  if  the 
property  has  depreciated  in  value  through  the  fault  or  neg- 
ligence of  the  mortgagor,  or  tenant  in  possession.  And 
when,  in  addition  to  the  inadequacy  of  the  security  and  the 
mortgagor's  insolvenc}r,  he  had  transferred  the  property  to 
a  third  person,  also  insolvent,  and  who  paid  no  portion  of 
the  purchase  money  and  failed  to  carry  out  his  agreement 
to  pay  a  portion  of  plaintiff's  mortgage,  by  reason  of  which 
agreement  the  mortgagee  had  delayed  the  enforcement  of 
his  demand,  the  circumstances  were  deemed  sufficient  to 
warrant  a  receiver  of  the  crops  growing  upon  the  premises, 
unless  the  defendant  would  give  adequate  security  for  any 
deficiency  which  might  result.1  And  when  the  mortgagee 
files  a  bill  to  foreclose,  showing  that  he  has  no  personal 
security  for  his  debt,  that  the  premises  are  an  inadequate 
security,  that  the  mortgagor  who  is  in  possession  and  in 
receipt  of  the  rents  has  not  kept  down  the  interest  and 
taxes,  thereby  permitting  a  lien  for  taxes  to  be  created  par- 
amount to  that  of  the  mortgage,  he  is  entitled  to  a  receiver.2 
So  when  an  action  of  ejectment  is  brought  by  the  mortgagee 
to  recover  possession,  and  upon  a  bill  to  foreclose  he  applies 
for  a  receiver  in  aid  of  the  action  at  law,  he  is  entitled  to 
the  relief  when  the  mortgagor  is  insolvent  and  the  security 
inadequate,  the  mortgagor  having  removed  from  the  prem- 
ises and  delivered  possession  to  one  who  is  permitted  to 
retain  possession  without  payment  of  rent,  the  mortgagor 
having  also  committed  waste  and  threatening  future  waste.3 
But  the  fact  that  the  mortgagor  in  possession  had  made  an 
assignment,  according  to  law,  of  all  his  interest  in  the  prem- 
ises for  the  benefit  of  his  creditors,  under  which  assignment 
the  assignees  had  sold  the  mortgagor's  interest,  and  the 
purchaser  had  voluntarily  transferred  his  purchase  to  the 
wife  of  the  mortgagor,  was  held  not  to  constitute  any  strong 

iCortleyeu     v.      Hathaway,     3    567;  Chetwood  v.  Coffin,  30  N.  J. 
Stockt.,  39.  Eq.,  450. 

2Mahon  v.  Crothers,  28  N.  J.  Eq.,        3  Brasted  v.  Sutton,  30  N.  J.  Eq., 

462. 


568  KECEIVEKS.  [CUAP.  XV. 

ground  for  the  appointment  of  a  receiver  of  the  profits  of 
the  growing  crops,  in  behalf  of  a  first  mortgagor,  the  case 
being  regarded  as  standing  upon  the  same  ground  as  if 
there  had  been  no  assignment,  and  the  application  were 
made  against  the  mortgagor  in  possession.1 

§  671.  In  Mississippi,  while  the  mortgagor's  insolvency 
and  the  inadequacy  of  the  security  are  recognized  as  suffi- 
cient grounds  for  a  receivership,  the  relief  is  also  based  upon 
another  ground.  And  it  is  held,  in  that  state,  that  upon 
maturity  of  the  debt  and  a  failure  to  pay,  the  legal  title 
becomes  absolute  in  the  mortgagee,  which  draws  with  it  the 
right  of  possession,  and  that  in  appointing  a  receiver,  in  such 
case,  the  court  merely  confers  upon  him  such  rights  and 
powers  as  a  court  of  law  would  have  conferred  upon  the 
mortgagee,  where  his  title  was  sufficient  to  give  him  the 
possession  and  consequent  use  of  the  property.2  But,  unless 
the  mortgagee  has  contracted  to  have  the  rents  and  income 
after  default  made,  he  is  not  entitled  to  them,  nor  to  the  aid 
of  a  receiver  to  get  them  in,  unless  the  mortgaged  property 
is  insufficient  to  satisfy  the  debt.3 

§  672.  In  addition  to  the  two  principal  elements  already 
mentioned  as  the  usual  ground  upon  which  receivers  are 
allowed  in  this  class  of  cases,  the  fact  that  the  taxes  upon 
the  mortgaged  property  have  been  suffered  to  remain  un- 
paid, that  a  sale  for  unpaid  taxes  has  been  had,  and  that 
the  insurance  upon  the  buildings  covered  by  the  mortgage 
has  been  neglected,  presents  strong  grounds  for  the  inter- 
ference of  equity  by  a  receiver.4  And  when  the  mortgagor 
has  failed  to  comply  with  his  covenant  to  keep  the  premises 
insured  and  to  pay  the  taxes,  the  mortgagee  having  been 
compelled  to  pay  insurance  and  taxes,  and  it  is  shown  that 
the  premises  are  greatly  in  need  of  repairs,  the  court  will 

!Frisbie  v.   Bateman,    9    C.    E.        4  Wall  Street  Fire  Insurance  Co. 

Green,  28.  v.  Loud,  20  How.  Pr.,  95;  Finch  v. 

2  Hill  v.  Robertson,  24  Miss.,  368.  Houghton,  19  Wis.,  149;  Schreiber 

3  Whitehead  v.  Wooten,  43  Miss.,  v.  Carey,  48  Wis.,  208;  Eslava  v. 
523.  Crampton,  61  Ala.,  507. 


CTIAP.  XV.]  MORTGAGES.  509 

not  closely  scrutinize  the  proof  as  to  the  insufficiency  of  the 
security  before  granting  the  relief.1  So,  too,  the  existence 
of  a  contest  as  to  whether  a  large  portion  of  the  property, 
constituting  the  chief  value  of  the  security,  is  covered  by 
the  mortgage,  is  an  additional  ground  for  the  relief  in  such 
case.2 

§  673.  In  Nevada,  under  the  statutes  and  code  of  pro- 
cedure of  that  state,  a  mortgagee  has  but  one  remedy 
against  the  mortgagor  in  case  of  default,  viz.,  the  ordinary 
equitable  remedy  by  foreclosure  and  sale,  and  is  not  entitled 
to  bring  ejectment  at  law,  nor  to  a  strict  foreclosure  and 
sale.  For  this  reason,  inadequacy  of  the  security  and  the 
mortgagor's  insolvency  are  held  to  be  sufficient  to  warrant 
the  appointment  of  a  receiver  in  aid  of  foreclosure  proceed- 
ings ;  especially  when  the  mortgagor  has  pledged  the  rents 
and  profits  arising  from  the  mortgaged  premises  to  keep  down 
the  interest  on  the  mortgage,  and  when  he  afterward  diverts 
the  rents  from  this  purpose.  And  when,  in  such  case,  the 
mortgagees  themselves  become  the  purchasers  at  the  fore- 
closure sale,  and  under  the  statute  a  period  of  six  months 
must  intervene  between  the  sale  and  the  time  when  the  pur- 
chasers are  entitled  to  a  deed  and  the  possession  of  the 
premises,  the  court  will  extend  the  protection  of  a  receiver 
to  the  purchasers.3 

§  674.  In  California,  however,  under  a  similar  statute  to 
that  of  Nevada,  limiting  the  mortgagee's  remedy  to  the  or- 
dinary foreclosure,  a  contrary  doctrine  prevails,  and  it  is 
held  that  the  same  reasons  for  the  interference  of  equity  do 
not  exist  as  under  the  English  practice,  in  the  appointment 
of  receivers  to  collect  the  rents  of  the  mortgaged  premises 
pendente  lite.  The  mortgage  being  considered  only  as  a 
security  for  the  debt,  the  estate  remains  that  of  the  mort- 
gagor as  owner,  and  must  continue  so  to  remain  until,  by 
foreclosure  and  sale,  a  new  owner  is  substituted.     Hence 

1  Eslava  v.  Crampton,  61  Ala.,  2  Wall  "Street  Fire  Insurance  Co. 
507.  v.  Loud,  20  How.  Pr.,  95. 

3  Hyman  v.  Kelly,  1  Nev.,  179. 


570  RECEIVERS.  [CHAP.  XV. 

the  mortgagee  is  not  entitled  to  the  aid  of  a  receiver,  even 
though  the  bill  alleges  the  insolvency  of  the  mortgagor  and 
inadequacy  of  the  security.1  And  in  Iowa,  the  mortgagor 
being  entitled  to  possession  until  the  expiration  of  a  year 
from  the  foreclosure  sale,  and  entitled  to  the  crops  during 
such  period,  the  mortgagee  will  not  be  allowed  a  receiver 
because  of  inadequacy  of  the  security  and  insolvency  of  the 
mortgagor,  although  it  is  averred  that  the  mortgagor  has 
fraudulently  disposed  of  other  property  upon  which  the 
mortgagee  has  no  lien.2 

§  675.  While,  as  a  general  rule,  the  courts  will  not  inter- 
fere by  appointing  receivers  in  aid  of  mortgagees  when  the 
indebtedness  is  not  yet  due,3  yet  there  may  be  circumstances 
sufficient  to  justify  a  partial  departure  from  the  rule.  And 
when,  from  the  nature  of  the  mortgaged  premises,  it  is  ap- 
parent that  they  are  so  indivisible  as  to  render  it  necessary 
to  sell  them  as  an  entirety  upon  a  decree  in  foreclosure,  a 
receiver  will  be  allowed,  although  only  a  portion  of  the 
mortgage  indebtedness  is  due,  if  it  is  satisfactorily  shown 
to  the  court  that  the  premises  are  an  inadequate  security  for 
the  debt,  and  that  the  mortgagor  is  personally  irresponsible 
for  the  deficiency  in  the  security.4  If,  however,  there  is 
doubt  as  to  the  amount  actually  due,  and  the  plaintiff's  alle- 
gations as  to  the  inadequacy  of  the  security  are  denied  by 
the  answer,  the  court  will  not  interfere  with  the  possession 
by  appointing  a  receiver.5 

§  676.  The  interference  of  courts  of  equity  by  appoint- 
ing receivers  over  the  mortgaged  estate  upon  the  principal 
grounds  already  discussed,  is  not  confined  to  mortgages  of 
the  fee,  but  may  also  be  allowed  in  case  of  a  mortgage  of  a 
leasehold  interest  in  the  premises.  And  upon  a  bill  to  fore- 
close a  mortgage  of  a  leasehold,  when  the  mortgagor  is  in 

iGuy  v.  Ide,  6  Cal.,  99.  Ch.,  405.     See,  also,  Buchanan  v. 

2  White  v.  Griggs,  54  Iowa,  C50.     Berkshire    Life  Insurance  Co.,  96 

3  Bank  of  Ogdensburgh  v.  Arnold ,     Ind. ,  510. 

5  Paige,  38.  5  Callanan    v.    Shaw,    19    Iowa, 

4Quincy  v.  Cheeseman,  4  Sandf.     183. 


CHAP.  XT.] 


MORTGAGES. 


571 


insolvent  circumstances  and  has  transferred  his  equity  of 
redemption  in  the  premises,  a  receiver  may  be  appointed, 
and  the  assignee  of  the  mortgagor  in  possession  will  be  di- 
rected to  attorn  to  the  receiver.  The  relief  is  regarded  as 
peculiarly  appropriate  in  such  case,  since  without  it  the 
owner  of  the  equity  of  redemption  might,  by  protracting 
the  litigation  until  the  expiration  of  the  lease,  render  the 
security  utterly  valueless.1 

§  677.  In  an  action  for  the  foreclosure  of  a  mortgage, 
when  a  receiver  is  sought  by  the  mortgagee  upon  the 
ground  of  inadequate  security  and  the  mortgagor's  insolv- 
ency, it  is  no  sufficient  objection  to  the  interference  of  the 
court,  that  the  premises  are  in  possession  of  a  tenant  of  the 
mortgagor,  when  the  tenant  is  before  the  court  as  a  party 
to  the  suit ;  since,  if  such  possession  by  the  tenant  were  to 
be  recognized  as  a  bar  to  relief  in  equity  hy  a  receiver,  it 
would  be  in  the  power  of  a  mortgagor  to  greatly  jeopard- 
ize the  security  and  rights  of  the  mortgagee,  simply  by 
placing  the  property  in  the  possession  of  a  tenant.2  So 
persons  who  have  taken  possession  of  the  mortgaged  prem- 
ises under  contract  with  the  mortgagor,  after  default  in 


1  Astor  v.  Turner,  2  Barb.,  444. 

-Keep  v.  Michigan  Lake  Shore 
R.  Co.,  U.  S.  Circuit  Court,  West- 
ern District  of  Michigan,  6  Chicago 
Legal  News,  101.  This  was  an  ap- 
plication for  a  receiver,  upon  a  bill 
for  foreclosure  filed  by  trustees  in 
a  mortgage  given  by  a  railway 
company  to  secure  its  bonds,  the 
mortgagor  having  delivered  pos- 
session of  tbe  property  to  a  tenant. 
The  court,  Withey,  J.,  say,  p.  102: 
"  The  objection  is  made  to  appoint- 
ing a  receiver  because  the  Conti- 
nental Improvement  Co.  is  in 
possession  as  tenant  of  the  mort- 
gagors, and  it  is  claimed  the  extent 
a  court  will  go,  in  such  case,  is  to 
order  the  tenant  to  attorn   to  the 


mortgagee.  If  the  tenant  was  not 
a  party  before  the  court,  that 
would  be  no  objection  to  the  ap- 
pointment of  a  receiver,  to  whom 
the  tenant  could  be  required  to 
attorn  and  pay  over  the  rents,  in- 
stead of  paying  them  to  the  mort- 
gagor, but  without  power  in  such 
receiver  to  molest  the  possession  of 
the  tenant.  When,  however,  the 
tenant  is  a  party  before  the  court, 
a  receiver  of  the  mortgaged  prem- 
ises may  be  appointed.  Any  other 
view  would  place  it  in  the  power 
of  a  mortgagor,  by  leaving  the 
mortgaged  property,  to  greatly 
jeopardize  the  security  and  inter- 
ests of  a  mortgagee." 


572  RECEIVERS.  [CHAT.  XV. 

payment  of  the  mortgage  indebtedness  and  with  knowledge 
of  the  mortgagor's  insolvency  and  of  the  condition  of  the 
property,  may  be  required  to  surrender  possession  to  the 
receiver,  or  to  pay  a  reasonable  rental  for  the  premises.1 

§  678.  Where  a  corporation  of  a  quasi  public  nature,  as 
a  canal  company,  issues  bonds  for  the  completion  of  its 
undertaking,  pledging  all  its  property,  real  and  personal,  for 
the  payment  of  the  bonds  and  interest,  and  making  them  a 
first  Hen  upon  the  assets  of  the  company,  the  bonds  will  be 
regarded  as  in  the  nature  of  a  mortgage,  to  the  extent  of 
authorizing  a  receiver  in  behalf  of  the  bondholders,  to  take 
charge  of  the  affairs  of  the  company  upon  a  bill  alleging 
non-payment,  and  that  the  corporation  is  insolvent  and  its 
property  going  to  ruin.2 

§  678  a.  The  right  to  the  aid  of  a  receiver  in  a  foreclos- 
ure suit  is  not  limited  to  the  mortgagee  or  his  assigns,  and 
the  relief  may  be  granted  in  behalf  of  other  parties  to  the 
action  when  necessary  for  the  protection  of  their  interests 
in  the  subject-matter  of  the  litigation.  Thus,  when  a  wife 
has  joined  in  the  execution  of  a  mortgage  upon  lands  of 
the  husband  to  secure  his  indebtedness,  and  her  inchoate  in- 
terest is  afterward  set  off  and  allotted  to  her  in  a  portion  of 
the  lands  absolutely,  under  a  statute  of  the  state,  if  the  re- 
mainder of  the  premises  is  insufficient  to  pay  the  debt  and 
the  husband  is  insolvent,  a  receiver  may  be  appointed  over 
such  remainder  upon  the  application  of  the  wife  upon  a 
cross-bill  by  her  seeking  to  have  the  remainder  first  sold 
and  applied  in  satisfaction  of  the  mortgage  debt.3 

§  678  b.  When  a  mortgagee  seeks  the  aid  of  a  receiver  to 
collect  the  rents  and  apply  them  in  payment  of  the  mort- 
gage indebtedness,  upon  the  ground  of  inadequate  security 
and  insolvency  of  the  mortgagor,  the  proper  time  for  the 
mortgagor  to  assert  his  right  to  the  rents  as  being  exempt 
under  the  exemption  laws  of  the  state  is  upon  the  hearing 

1  Mutual  Life  Insurance  Co.  v.  -  White  Water  Valley  Canal  Co. 
Spicer,  12  Hun,  117.  v.  Vallette,  21  How.,  414. 

3 Main  v.  Giuthert,  92  Inch,  180. 


CHAP.  XV.]  MORTGAGES.  573 

of  the  application  for  the  receiver.  And  when  the  receiver 
has  been  appointed  and  directed  to  apply  the  rents  in  pa}T- 
ment  of  the  debt,  the  mortgagor  can  not,  by  a  subsequent 
action,  recover  such  rents  from  the  receiver  upon  the  ground 
that  they  are  exempted  from  seizure,  the  order  appointing 
the  receiver,  in  such  case,  being  regarded  as  res  judicata  upon 
the  question  of  the  right  to  the  rents.1 

1  Storm  v.  Ermantrout,  89  Ind.,  214. 


574:  RECEIVERS.  [CHAP.  XV. 


III.  Receivers  as  Between  Different  Mortgagees. 

§  679.    Receiver  not  granted  as  against  prior  mortgagee  in  possession. 

680.  The  rule  applied  against  judgment  creditors,  and  against  heirs- 

at-law. 

681.  Relief  granted  when  nothing  appears  to  be  due  prior  mortgagee 

in  possession. 

682.  Subsequent  mortgagees  may  have  receiver  when  prior  mortgagee 

not  in  possession ;  consent  of  prior  mortgagee  not  necessary. 

683.  Annuitants  allowed  receiver  when  prior  mortgagees  have  not 

taken  possession. 

684.  Right  to  relief  when  mortgagor  is  beyond  jurisdiction  of  court. 

685.  Appointment  made  without  prejudice  to  prior  equities. 

686.  Receiver  granted  to  mortgagee  of  corporate  property. 

687.  When  judgment  creditor  denied  relief  as  against  a  puisne  mort- 

gagee in  possession. 

688.  Right  to  rents;  mortgagee  first  obtaining  receiver  entitled  to 

priority ;  subrogation ;  payment  according  to  priority. 

689.  Contrary  doctrine  in  Virginia. 

690.  Prior  mortgagee  denied  receiver  of  rents  which  have  been  as- 

signed by  mortgagor  to  junior  mortgagee. 

691.  Receiver  allowed  on  bill  by  junior  mortgagee  for  foreclosure  and 

to  compel  prior  mortgagee  to  exhaust  another  mortgage ;  ten- 
ants required  to  attorn  to  receiver. 

§  679.  Under  the  English  practice,  when  there  are  several 
mortgages  of  different  priority  upon  the  same  premises,  the 
first  mortgagee,  being  vested  with  the  legal  title  and  the 
right  to  immediate  possession,  is  called  the  legal  mortgagee, 
and  all  others  are  equitable  mortgagees  or  incumbrancers. 
And  the  doctrine  of  the  English  Court  of  Chancery,  an- 
nounced in  strong  terms  by  Lord  Eldon,  and  which  has 
also  been  recognized  and  enforced  in  this  country,  was,  that 
as  against  a  prior  mortgagee  in  possession  of  the  property 
under  his  mortgage,  a  receiver  would  never  be  granted  in 
behalf  of  subsequent  mortgagees,  while  anything  remained 
due  to  the  prior  mortgagee  under  his  incumbrance.  In 
such  cases,  the  only  remedy  open  to  the  second  or  equitable 
mortgagee  is  to  pay  off  the  prior  incumbrancer  and  redeem 
from  the  hen  of  his  mortgage.     The  rule  is  based  upon  the 


CHAP.  XV.] 


MORTGAGES. 


575 


unwillingness  of  courts  of  equity  to  interfere  with  the  legal 
title  or  with  possession  under  it,  and  their  disinclination  to 
substitute  another  security  for  that  which  the  parties  con- 
tracted for.  The  courts  refuse,  therefore,  to  grant  a  re- 
ceiver in  this  class  of  cases,  or  to  interfere  with  the  receipt 
of  the  rents  and  profits  by  the  prior  mortgagee  in  posses- 
sion, since  such  interference  would  virtually  have  the  effect 
of  dispossessing  him.1  And  upon  motion  for  a  receiver 
against  a  mortgagee  in  possession,  who  insists  by  his  answer 
that  he  ha.s  not  been  fully  paid,  the  court  will  not,  by  affi- 
davits upon  the  hearing  of  the  motion,  try  the  question  as 


JBerney  v.  Sewell,  1  Jac.  &  W., 
647;  Rowe  v.  Wood,  2  Jac.  &  W., 
553;  Hilesv.  Moore,  15  Beav.,  175; 
Trenton  Banking  Co.  v.  Woodruff, 
2  Green  Ch.,  210.  See,  also,  Cod- 
rington  v.  Parker,  16  Ves.,  469; 
Faulkener  v.  Daniel,  10  L.  J.,  N.  S. 
Ch.,  33;  Quinn  v.  Brittain,  3  Edw. 
Ch.,  314.  In  Berney  v.  Sewell,  1 
Jac.  &  W.,  647,  the  rule  was  stated 
by  Lord  Eldon  as  follows:  "  If  a 
man  has  a  legal  mortgage,  he  can 
not  have  a  receiver  appointed ;  he 
has  nothing  to  do  but  to  take  pos- 
session. If  he  has  only  an  equita- 
ble mortgage,  that  is,  if  there  is  a 
prior  mortgagee,  then,  if  the  prior 
mortgagee  is  not  in  possession,  the 
other  may  have  a  receiver  without 
prejudice  to  his  taking  possession ; 
but,  if  he  is  in  possession,  you  can 
not  come  here  for  a  receiver ;  you 
must  redeem  him,  and  then,  in 
taking  the  accounts,  he  will  not  be 
allowed  any  sums  that  he  may 
have  paid  over  to  the  mortgagor 
after  notice  of  the  subsequent  in- 
cumbrance. If  you  recollect,  in 
Mr.  Beckford's  case,  I  went  to  the 
very  utmost;  I  said  then  that  if 
Mr.  Beckford  would  swear  that 
there  was  sixpence  due  to  him,  I 
would  not  take  away  the  possession 


from  him.  If  there  is  anything 
due,  I  can  not  substitute  another 
security  for  that  which  the  mort- 
gagee has  contracted  for.  I  know 
no  case  where  the  court  has  ap- 
pointed a  receiver  against  a  mort- 
gagee in  possession,  unless  the 
parties  making  the  application  will 
pay  him  off,  and  pay  him  off  ac- 
cording to  Ms  demand  as  he  states 
it  himself.  I  can  not  appoint  the 
receiver  against  these  defendants, 
unless  you  can  bring  me  their  con- 
fession that  they  are  paid  off,  or 
their  refusal  to  accept  what  is  due 
to  them.  The  rule  about  receivers 
is  very  clear ;  a  mortgagee  who  has 
the  legal  estate  can  not  have  a 
receiver;  an  equitable  mortgagee 
may,  but  he  can  not  if  the  first  is 
in  possession.  I  remember  a  case 
where  it  was  much  discussed 
whether  the  court  would  appoint  a 
receiver  when  it  appeared  by  the 
bill  that  there  was  a  prior  mort- 
gagee who  was  not  in  possession. 

1  have  a  note  of  that  case.  Then; 
Lord  Thurlow  made  the  appoint- 
ment without  prejudice  to  the  first 
mortgagee's  taking  possession,  and 
that  was  afterward  followed  by 
Lord  Kenyon."  See  Rowe  v.  Wood, 

2  Jac.  &  W.,  553. 


576  RECEIVERS.  [CHAP.  XV. 

to  whether  any  balance  is  still  due  to  the  mortgagee.1  Nor 
will  the  court  interpose,  even  though  the  priority  of  the 
first  mortgagee  in  possession  is  contested  by  the  other  mort- 
gagee, when  he  does  not  show  that  the  mortgagee  in  posses- 
sion is  insolvent  and  unable  to  respond  in  case  it  should  be 
determined  that  he  has  not  a  priority  of  lien.a 

§  680.  The  rule  as  laid  clown  in  the  preceding  section  is 
not  confined  to  cases  where  the  subsequent  claimant  is 
strictly  a  mortgagee,  but  is  sometimes  extended  to  cases 
where  the  claim  or  right  asserted  as  against  the  estate  is  of 
another  nature.  Thus,  it  is  held  that,  as  against  a  mort- 
gagee in  possession,  holding  the  premises  as  security  for  his 
debt,  a  court  of  equity  will  not  appoint  a  receiver  of  the 
rents  and  profits  on  a  creditor's  bill  filed  by  a  judgment 
creditor  of  the  mortgagor,  when  the  mortgagee  has  not 
been  paid  the  amount  due  him  and  is  fully  able  to  respond 
for  what  he  may  receive.3  So,  too,  as  against  mortgagees 
in  possession,  whose  mortgage  and  other  charges  upon  the 
estate  have  not  been  fully  satisfied,  the  heirs-at-law  of  the 
testator,  upon  a  bill  against  the  mortgagees  for  an  account, 
are  not  entitled  to  a  receiver  of  the  mortgaged  premises. 
And  in  such  case,  it  is  a  sufiicient  answer  to  the  application 
for  a  receiver  that  the  mortgage  and  other  charges  upon  the 
estate  prior  to  the  claim  of  the  heirs  have  not  been  dis- 
charged.4 

§  681.  In  the  application  of  the  rule  under  discussion, 
denying  a  receiver  as  against  a  first  mortgagee  in  possession, 
it  must  clearly  appear  that  something  remains  actually  due 
to  such  mortgagee.5  And  where  the  mortgagee  in  posses- 
sion had  been  so  negligent  in  keeping  his  accounts,  that  it 
could  not  be  determined  what  was  due  under  his  mortgage, 

iRowe  v.  Wood,  2  Jac.  &  W.,  4Faulkener  v.  Daniel,  10  L.  J.,  N. 

553.  S.  Ch.,  33. 

2  Trenton  Banking  Co.  v.  Wood-  5  See  Codrington    v.   Parker,   16 

ruff,  2  Green  Ch.,  210.  Ves.,  469 ;  Hiles  v.  Moore,  15  Beav., 

3Quinn  v.  Brittain,  3  Edw.  Ch.,  175. 
314. 


CHAP.  XV.]  MORTGAGES.  577 

the  court  allowed  the  motion  for  a  receiver  to  stand  over  in 
order  that  defendant  might  show  by  affidavit  how  much 
was  due  him,  and  directed  that,  if  he  failed  to  give  such  in- 
formation, a  receiver  should  be  allowed.1  So  when  a  third 
mortgagee  took  possession  of  the  premises,  and-  afterward 
bought  up  a  first  mortgage  with  a  view  to  tacking  the  secu- 
rities, and  remained  in  possession  several  years,  receiving  con- 
siderable sums  of  money  from  the  premises,  a  receiver  was 
allowed  as  against  him  upon  the  application  of  the  second 
mortgagee,  when  it  did  not  satisfactorily  appear  that  any- 
thing was  due  under  the  first  mortgage.  The  interference 
of  the  court,  under  such  circumstances,  rests  upon  the  ne- 
cessity of  protecting  the  rents  and  profits  of  the  estate  for 
the  benefit  of  those  who  shall  ultimately  be  found  entitled 
to  them.2 

§  682.  It  has  been  shown  in  the  preceding  sections,  that 
the  doctrine  of  non-interference  as  against  prior  mortgagees 
is  strictly  limited  to  cases  where  the  mortgagee  has  actually 
taken  possession  of  the  premises  under  his  mortgage,  and 
has  no  application  to  cases  where  the  prior  mortgagee  is  out 
of  possession.  And  the  rule  is  well  settled,  that  when  the  first 
mortgagee  has  not  taken  possession  of  the  property,  equity 
may  properly  interfere  in  behalf  of  subsequent  mortgagees 
or  equitable  incumbrancers  and  creditors,  and  may  appoint 
a  receiver  for  their  protection,  but  without  prejudice  to  the 
rights  of  the  first  mortgagee.3  The  only  doubt  which  seems 
to  have  existed  as  to  the  propriety  of  the  doctrine  has  been 
upon  the  question  of  the  necessity  of  first  obtaining  consent 
of  the  prior  mortgagee  before  interfering  by  a  receiver. 
And  in  a  case  decided  by  Lord  Tlmrlow  in  1783,  the  rule 
was  stated  to  be,  that  a  second  mortgagee  could  not  have  a 

^odrington  v.  Parker,  16  Ves.,  ceiver  is  sought  of  the  rents  and 

469.  profits. 

2Hiles  v.  Moore,  15  Beav.,  175.  3  Bryan  v.  Cormick,  1  Cox,  422; 

And  see  this  case  as  to  the  practice  Dalmer  v.  Dash  wood,  2  Cox,  378 ; 

in  determining  the  rights  of  con-  Tanfield  v.  Irvine,  2  Russ.,  149. 
flicting  mortgagees,   where    a    re- 
37 


57S 


RECEIVERS. 


[chap.  XV. 


receiver  without  the  consent  of  the  first,  since  the  court 
could  not  prevent  the  first  mortgagee  from  bringing  an  ac- 
tion of  ejectment  against  the  receiver  immediately  upon  his 
appointment.1  Subsequently,  however,  the  same  learned 
chancellor  seems  to  have  become  convinced  that  the  con- 
sent of  the  prior  mortgagee  was  not  necessary  to  confer 
jurisdiction,  and  in  a  case  decided  by  him  in  1788,  a  receiver 
was  allowed  of  the  mortgaged  premises  in  behalf  of  subse- 
quent equitable  creditors,  although  it  was  objected  on  the 
part  of  mortgagees  that  the  court  never  appointed  a  receiver 
of  a  mortgaged  estate  without  the  consent  of  the  mortgagee.2 
And  the  court  will  not  permit  the  prior  incumbrancer  to 
prevent  the  appointment  of  a  receiver  by  anything  short  of 
a  personal  assertion  of  his  legal  right,  and  the  taking  pos- 
session himself.3 

§  683.  As  illustrative  of  the  rule  allowing  receivers,  in 
behalf  of  subsequent  equitable  mortgagees  or  incumbran- 
cers, upon  the  grounds  already  stated,  it  is  held  that  annu- 
itants whose  annuities  are  chargeable  upon  real  estate  which 


1  Phipps  v.  Bishop  of  Bath,  Dick., 
608.  This  was  an  application  on 
behalf  of  a  second  mortgagee  for 
a  receiver,  and  that  he  might  apply 
the  rents  in  keeping  down  the  in- 
terest of  a  mortgage,  and  of  an- 
other charge  upon  the  estate,  and 
pay  the  surplus  rents  into  bank. 
The  first  mortgagee  had  declined 
any  steps  to  get  possession.  Lord 
Thurlow  held  as  follows :  ';  A  sec- 
ond mortgagee,  the  mortgagor  liv- 
ing, can  not  have  a  receiver  with- 
out the  consent  of  the  first  mort- 
gagee, because  the  court  can  not 
prevent  the  first  mortgagee  from 
bringing  an  ejectment  against  the 
receiver  as  soon  as  he  is  appointed." 

2  Bryan  v.  Cormick,  1  Cox,  422. 
Lord  Thurlow  asked  if  the  mort- 
gagees were  in  possession,  ' '  and  it 
appearing  they  were  not,  his  lord- 


ship said  he  could  see  no  reason,  if 
a  mortgagee  had  not  thought 
proper  to  take  possession,  why  the 
court  should  not  put  a  receiver  on 
the  estate,  so  as  that  it  should  be 
without  prejudice  to  the  mort- 
gagee's right  to  obtain  the  posses- 
sion. "Where  a  receiver  has  been 
appointed  of  a  mortgaged  estate, 
the  mortgagee  not  being  brought 
before  the  court,  the  mortgagee 
must  apply  to  the  court  for  liberty 
to  bring  an  ejectment,  which  is  of 
course.  So  here,  if  the  receiver  is 
appointed  without  prejudice  to  the 
mortgagee's  right,  there  could  be 
no  objection  to  it.  And  his  lord- 
ship ordered  that  the  receiver 
should  be  appointed  without  preju- 
dice," etc. 

3  Silver  v.  Bishop  of  Norwich,  3 
Swans.,  112,  note. 


C9HAT.  XV.]  MORTGAGES.  579 

has  been  previously  mortgaged  to  different  mortgagees,  are 
entitled  to  the  aid  of  equity  by  a  receiver  of  the  rents  of 
the  mortgaged  premises,  when  the  prior  mortgagees  have 
not  yet  taken  possession.  And  in  such  a  case,  it  is  not  neces- 
sary that  the  prior  incumbrancers  should  be  made  parties 
to  the  action,  but  the  order  for  the  receiver  will  be  made 
without  prejudice  to  their  rights.1 

§  684.  There  is  some  conflict  in  the  English  decisions 
upon  this  class  of  cases,  as  to  whether  the  subsequent  in- 
cumbrancer or  mortgagee  is  entitled  to  a  receiver  of  the 
rents  and  profits,  in  a  case  otherwise  sufficient  for  the  relief, 
when  the  mortgagor  is  beyond  the  jurisdiction  of  the  court, 
and  has  not  been  served  with  process.  The  better-consid- 
ered doctrine  appears  to  be,  that  the  court  may  properly  in- 
terfere in  such  a  case,  and  that  it  ought  not  to  permit  the 
rights  of  a  subsequent  incumbrancer  to  be  lost,  by  the  cir- 
cumstance that  the  mortgagor  has  not  entered  an  appear- 
ance, and  can  not  be  compelled  to  appear  because  beyond 
the  jurisdiction  of  the  court.2  But  a  contrary  doctrine  was 
held  in  another  case,  and  a  receiver  was  refused  in  behalf 
of  an  equitable  mortgagee,  upon  a  bill  against  the  mort- 
gagor and  a  subsequent  equitable  incumbrancer,  where  the 
mortgagor  resided  beyond  the  jurisdiction  of  the  court  and 
had  not  appeared  to  the  suit,  And  the  refusal  to  interfere 
was  based  upon  the  ground  that  the  court  had  no  jurisdic- 
tion, for  the  purposes  of  an  application  for  a  receiver, 
against  the  possession  of  a  party  who  was  not  before  the 
court  to  defend  himself.3 

i  Dalmer  v.  Dashwood,  2  Cox,  378.  equal  authority  with  Tanfield  v.  Ir- 

-  Tanfield  v,  Irvine,  2  Russ.,  149.  vine,  2  Russ.,  149,  which  was  before 

3 «•  Chadwick,  4 L.  J.,  Ch.,  the  High  Court  of  Chancery.    And 

67.  In  this  case,  a  bailiff  of  the  additional  doubt  is  thrown  upon 
mortgagor  received  the  rents  of  its  weight  as  authority  by  a  note  of 
the  estate,  and  remitted  them  to  the  reporter,  who  adds:  "It  is 
the  mortgagor  residing  in  a  foreign  supposed  by  some  of  the  most  ex- 
country.  The  decision,  however,  perienced  king's  counsel,  that  the 
being  in  the  Vice-Chancellor's  Lord  Chancellor  has  appointed  re- 
court,  can  hardly  be  regarded  as  of  ceivers  in  similar  cases." 


580  KECEIVEKS.  [CHAP.  XV. 

§  685.  While,  as  has  thus  been  shown,  courts  of  equity 
may,  in  proper  cases,  interfere  by  appointing  receivers  in 
aid  of  subsequent  equitable  incumbrancers  or  creditors, 
they  yet  proceed  in  the  exercise  of  this  branch  of  their 
jurisdiction  with  much  caution.  And  the  established  rule 
is,  that  the  court  will  only  grant  a  receiver  in  behalf  of  an 
equitable  creditor  or  incumbrancer,  by  making  the  order 
without  prejudice  to  persons  having  prior  interests  or  estates 
in  the  property.  If  their  prior  estates  are  legal  estates  or 
interests,  the  court  by  its  appointment  does  not  prevent 
them  from  proceeding  to  obtain  possession  under  their  legal 
title,  if  they  think  proper.  If  they  are  equitable  estates, 
the  court  takes  care,  in  the  appointment  of  its  receiver,  not 
to  disturb  any  prior  equities,  and  for  this  purpose  directs  in- 
quiries to  determine  priorities  among  the  different  equitable 
incumbrancers.1  And  the  appointment  of  a  receiver,  in 
cases  where  there  are  incumbrancers  or  mortgagees  inter- 
ested adversely  to  the  plaintiff  obtaining  the  receiver,  is  for 
the  benefit  of  such  incumbrancers  only  so  far  as  expressed 
to  be  for  their  benefit,  or  so  far  as  they  choose  to  avail 
themselves  of  it,  since  a  court  of  equity  will  not  interfere 
to  deprive  them  of  the  advantage  of  their  legal  rights.2 

§  686.  When  it  is  satisfactorily  made  to  appear  to  the 
court,  that  a  receiver  in  behalf  of  a  mortgagee  of  the  prop- 
erty of  a  corporation  is  necessary  to  protect  the  mort- 
gagee's interests,  it  is  no  sufficient  objection  to  granting  the 
relief  that  a  large  number  of  other  mortgagees  of  the  same 
property  are  satisfied  with  the  management  of  the  corpo- 
ration, which  is  in  the  hands  of  a  manager  or  trustee  for 
the  benefit  of  the  mortgagees.  And  the  court  will  grant  a 
receiver,  in  such  case,  although  the  mortgagee  seeking  the 
relief  represents  only  one-ninth  of  the  mortgage  indebted- 
ness.3 

i  Davis  v.  Duke  of  Marlborough,  3  Fripp  v.  The  Bridgewater  Co. , 

2  Swans.,  137,  138,  165.  11  Hare,  239;  S.  C,  17  Jur.,  887 

2Gresley  v.  Adderley,  1  Swans.,  22  L.  J.,  1084. 
573. 


CHAP.  XV.]  MORTGAGES.  581 

§  687.  Under  the  practice  of  the  Irish  Court  of  Chan- 
cery, a  receiver  can  not  be  appointed  on  the  application  of 
a  judgment  creditor,  after  his  debtor  is  adjudicated  a  bank- 
rupt, as  against  a, puisne  mortgagee  in  possession.1 

§  688.  The  question  of  the  right  to  rents  and  profits  of 
the  mortgaged  estate,  upon  the  appointment  of  receivers 
where  there  are  different  mortgagees,  is  one  of  considerable 
importance  and  deserving  of  special  notice.  The  general 
rule  is  that  a  junior  mortgagee,  who  obtains  a  receiver  of 
the  rents  and  profits,  in  aid  of  a  bill  to  foreclose  his  mort- 
gage, is  entitled  to  the  rents  and  profits  at  the  hands  of  such 
receiver,  up  to  the  time  of  appointing  a  receiver  upon  a  bill 
by  a  prior  mortgagee,  not  a  party  to  the  original  suit.  And 
the  prior  mortgagee  is  only  entitled  to  have  of  the  receiver 
such  rents  and  profits  as  accrue  after  the  appointment  in 
aid  of  such  prior  mortgagee,  although  one  and  the  same 
person  is  appointed  in  both  cases.  The  rule  is  based  upon 
the  consideration  that,  until  the  elder  mortgagee  sees  fit  to 
assert  his  right  to  the  rents  and  income,  a  junior  incum- 
brancer has  a  right  so  to  do,  and  the  first  mortgagee  not 
being  a  party  to  the  former  suit,  and  having  no  lien  on  the 
rents  and  profits,  and  no  right  to  recover  the  back  rents,  he 
can  only  assert  his  right  thereto,  as  against  the  receiver, 
from  the  date  of  appointment  in  his  own  suit.2  The  proper 
course,  therefore,  for  an  incumbrancer  to  take  who  is  de- 
sirous of  having  the  benefit  of  a  receiver  already  appointed, 
is  to  file  a  bill  for  that  purpose  and  obtain  an  order  ex- 
tending the  receiver  to  his  incumbrance.3  In  such  case,  the 
extension  of  the  receiver  is  regarded  as  a  new  appointment, 
and  the  rents  theretofore  received  by  him  are  treated  as 

1  Ryan  v.  Lefroy,  3  Ir.  Ch.,  N.  S.,  Eq.,  43 ;  Agra  &  Masterman's  Bank 
351.  v.  Barry,  Ir.  Rep.,  3  Eq.,  443;  La- 

2  Howell  v.  Ripley,  10  Paige,  43 ;  nauze  v.  Belfast.  Holy  wood  & 
Ranney  v.  Peyser,  83  N.  Y.,  1;  Bangor  R.  Co.,  id.,  454;  Mil  ten- 
Washington  Life  Insurance  Co.  v.  berger  v.  Logansport  Railway  Co., 
Fleischauer,  10  Hun,  117.    And  see  106  U.  S.,  286. 

Post  v.    Dorr,   4  Edw.   Ch.,    412;        3 Sanders  v.  Lord  Lisle,  Ir.  Rep., 
Sanders  v.  Lord  Lisle,  Ir.  Rep.,  4    4  Eq.,  43. 


582  RECEIVERS.  [CHAP.  XT. 

bv-gone  rents  which  the  mortgagee  last  asserting  his  right 
has  suffered  other  claimants  to  realize,  and  the  order  ex- 
tending the  receiver  for  the  benefit  of  the  prior  mortgagee 
will  attach  only  to  the  rents  thereafter  received.1  And 
until  this  course  is  pursued,  the  incumbrancer  upon  whose 
application  the  receiver  was  originally  appointed  is  entitled 
to  have  the  rents  received  applied  in  satisfaction  of  his  de- 
mand, irrespective  of  any  question  of  priority,  since  such 
rents  are  realized  by  his  superior  diligence.  Hence  the 
court  will  refuse  to  direct  the  receiver  already  appointed  to 
pay  out  of  the  rents  and  profits  the  arrears  due  to  the  mort- 
gagee or  incumbrancer  who  has  not  yet  filed  his  bill  or  ob- 
tained an  order  extending  the  receiver  for  his  protection, 
since  such  order  would  deprive  the  mortgagee  first  obtain- 
ing a  receiver  of  all  benefit  or  advantage  gained  by  his 
diligence.2  But  when  the  receiver  is  appointed  in  a  suit  to 
foreclose  a  first  mortgage,  the  second  mortgagee  being  a 
party,  and  the  first  mortgage  is  satisfied  out  of  the  pro- 
ceeds of  the  foreclosure  sale,  leaving  a  surplus  which  is  ap- 
plied to  the  payment  of  the  second  mortgage,  if  such  surplus 
is  insufficient  to  pay  the  second  mortgage  in  full,  resort  may 
be  had  for  the  deficiency  to  the  rents  collected  by  the  re- 
ceiver. In  such  case,  the  first  mortgagee  having  procured 
the  receiver  and  having  the  right  to  satisfy  his  debt,  either 
out  of  the  proceeds  of  sale  or  out  of  the  rents  collected  by 
the  receiver,  if  he  elects  to  take  the  proceeds  of  sale,  the 
second  mortgagee  is  entitled  to  be  subrogated  to  the  rents.3 
But  if  the  appointment  is  made  upon  the  application  of  a 
junior  mortgagee  in  an  action  to  which  all  the  prior  mort- 
gagees are  made  defendants,  and  the  appointment  is  not 
limited  to  or  made  in  behalf  of  the  junior  mortgagee,  but  is 
general  in  its  nature,  the  fund  collected  by  the  receiver  is 

1  Agra  &  Masterman's  Bank  v.  -  Sanders  v.  Lord  Lisle,  Ir.  Rep. , 

Barry,   Ir.    Rep.,   3  Eq.,   443;  La-  4  Eq.,  43;  Ranney  v.  Peyser,  83  N. 

nauze    v.    Belfast,     Holy  wood    &  Y.,  1. 

Bangor  R.  Co.,  id.,  454.     But  see  3  Keogh  v.  McManus,    34   Hun, 

Beverley  v.  Brooke,  4  Grat.,  187.  521. 


CHAP.  XV.]  MORTGAGES.  583 

applicable  to  the  payment  of  the  different  mortgages  in  the 
order  of  their  priority.1 

§  6S9.  Notwithstanding  the  rule  as  stated  in  the  preced- 
ing section,  as  to  the  right  to  rents  in  the  hands  of  a  receiver, 
where  there  are  different  mortgagees,  is  supported  by  the 
clear  weight  of  authority,  a  somewhat  different  doctrine  has 
been  established  in  Virginia.  And  it  is  there  held,  as  be- 
tween different  incumbrancers  of  the  same  property,  whose 
rights  are  conflicting  and  who  are  seeking  to  gain  priority 
by  different  suits  in  the  same  court,  that  the  appointment  of 
a  receiver  in  behalf  of  the  plaintiff  in  one  of  the  suits  is  for 
the  benefit  of  all  parties  in  interest;  and  that  when  the 
plaintiff  in  another  suit  succeeds  in  maintaining  his  priority 
of  right,  he  is  entitled  to  a  decree  for  an  account  of  the  rents 
and  proceeds  in  the  hands  of  the  receiver  appointed  in  the 
other  action,  and  an  appropriation  of  so  much  thereof  as 
may  be  necessary  for  the  satisfaction  of  his  debt.  The  ap- 
pointment of  a  receiver,  as  against  the  mortgagor  and  a 
prior  mortgagee,  is  also  held  to  be  in  the  nature  of  an  in- 
junction defeating  the  mortgagee's  right  of  election  to  take 
possession  of  the  property,  so  that  he  can  not  afterward 
take  possession  if  he  would,  the  court  having  taken  posses- 
sion for  him,  and  maintaining  it  until  his  right  is  determined. 
And  this  is  held  to  be  equally  true,  whether  his  right  be  im- 
peached in  an  adverse  suit  brought  against  him,  or  if,  not 
being  a  party  to  the  litigation,  he  obtains  leave  to  be  ex- 
amined therein  pro  interesse  suo.  But  the  two  cases  are 
regarded  as  distinguishable  in  this,  that  in  the  former  he  has 
only  to  await  the  decision  of  the  controversy,  and  receive 
the  proceeds  from  the  hands  of  the  court ;  while  in  the  lat- 
ter it  is  his  duty  to  come  forward  within  a  reasonable  time, 
since  if  he  suffers  the  fund  to  be  paid  over  to  the  mortgagor 
or  to  subsequent  incumbrancers,  he  will  be  too  late.2  The 
Virginia  doctrine,  however,  while  ingenious  in  theory,  lacks 
the  support  of  authority,  and  is  clearly  opposed  to  the  Eng- 

1  Williamson  v.  Gerlach,  41  Ohio        2  Beverley    v.    Brooke,    4   Grat, 
St.,  682>  187. 


5 Si  EECEIVEKS.  [CHAP.  XV. 

lish  rule,  that  the  appointment  of  a  receiver  in  behalf  of  a 
junior  incumbrancer  is  alwa}^s  without  prejudice  to  the 
rights  of  an  elder  mortgagee.1 

§  690.  It  has  already  been  shown,  that  the  courts  of  ISfew 
Jersey  have  always  been  averse  to  extending  the  aid  of  re- 
ceivers to  mortgagees,  when  the  mortgagor  is  in  possession 
of  the  premises,  and  the  usual  grounds  of  insolvency  of  the 
mortgagor  and  inadequacy  of  the  security,  upon  which  the 
relief  is  generally  based,  are  not  recognized  in  that  state  as 
sufficient  cause  for  a' receiver.2  It  is  also  held,  in  that  state, 
that  as  between  prior  and  subsequent  mortgagees  of  the 
same  premises,  upon  a  bill  by  the  prior  mortgagee  for  a 
foreclosure,  the  court  will  not  grant  a  receiver  of  the  rents 
and  profits  of  the  premises,  when  they  have  been  assigned 
by  the  mortgagor  to  the  junior  mortgagee  as  additional 
security  for  his  indebtedness.3 

§  691.  Upon  a  bill  by  a  junior  mortgagee  against  the 
mortgagor  and  an  elder  mortgagee  for  a  foreclosure,  and 
also  seeking  to  compel  the  prior  mortgagee  to  first  exhaust 
another  mortgage  held  by  him  upon  other  property  for  the 
same  indebtedness,  it  is  proper  that  a  receiver  should  be  had 
to  collect  thQ  rents,  upon  satisfying  the  court  of  the  insuffi- 
ciency of  the  security.  And  this  course  is  deemed  prefer- 
able to  that  of  compelling  the  first  mortgagee  to  bring 
ejectment  to  obtain  possession,  to  be  followed  by  an  action 
for  the  mesne  profits.  It  is  also  held,  that,  in  such  a  case,  it 
is  proper  to  appoint  the  receiver  upon  motion  of  the  defend- 
ant, the  first  mortgagee,  as  against  his  co-defendant,  the 
mortgagor.  And,  upon  appointing  a  receiver  of  mortgaged 
premises,  the  court  has  the  right  to  compel  the  tenants  of 

1  See  Bryan  v.  Cormick,  1  Cox,  3Best  v.  Schermier,  2  Halst.  Ch., 
422;  Dalmer  v.  Dasl.wjod,  2  Cox,  154.  And  the  chancellor  observed 
378;  Tanfieldv.  Irvine,  2Russ.,  149.  that    he    had    uniformly  declined 

2  Cortleyeu  v.  Hathaway,  3  applications  for  a  receiver  of  rents 
Stockt.,  39;  Frisbie  v.  Bateman,  9  on  the  filing  of  foreclosure  bills, 
C.  E.  Green,  28,  approving  and  fol-  upon  the  ground  that  the  mortga- 
lowing  Best  v.  Schermier,  2  Halst.  gor  was  entitled  to  the  rents  while 
Ch.,  154.  in  possession  by  his  tenants. 


CHAP.  XV.] 


MORTGAGES. 


585 


the  premises  to  attorn  to  the  receiver.1  So  when  a  second 
mortgagee  obtains  a  decree  of  foreclosure,  but  a  sale  of  the 
property  is  stayed  at  the  suit  of  a  third  person  assailing  the 
title  to  the  mortgage,  such  mortgagee  is  entitled  to  a  re- 
ceiver until  the  determination  of  the  controversy,  the  mort- 
gagor in  possession  being  insolvent,  the  taxes  and  insurance 
being  unpaid,  and  there  being  doubt  as  to  the  adequacy 
of  the  security.2  But  if  the  rents  are  being  applied  in  pay- 
ment of  the  mortgage  indebtedness,  taxes,  insurance  and 
care  of  the  property,  a  receiver  will  not  be  allowed  at  the 
suit  of  junior  mortgagees,  the  senior  mortgagees  being  con- 
tent with  the  management  of  the  property,  and  not  desir- 
ing a  receiver,  even  though  it  is  charged  that  the  security 
is  inadequate  and  the  mortgagor  insolvent.3 


1Henshaw  v.  Wells,  9  Humph., 
568. 

2  Warwick  v.  Hammell,  32  N.  J. 
Eq.,  427. 

3Myton  v.  Davenport,  51  Iowa, 
583.    As  to  the  duty  of  a  receiver, 


appointed  in  a  suit  for  the  fore- 
closure of  a  junior  mortgage  of  a 
leasehold  interest,  to  apply  the  rents 
in  payment  of  ground  rent  and 
taxes  upon  the  premises,  see  Ran- 
ney  v.  Peyser,  20  Hun,  11. 


CHAPTER  XYI. 

OF  RECEIVEES  IN  CASES  OF  TRUSTS. 

I.  Principles  Governing  the  Relief, §  692 

II.  Receivers  Over  Executors  and  Administrators,    ...  706 

III.  Receivers  Over  Estates  of  Infants, 725 

IV.  Receivers  Over  Estates  of  Lunatics, 733 

I.  Principles  Governing  the  Belief. 

§  692.     Principles  referred  to  general  jurisdiction  of  equity  over  trusts ; 
scope  of  the  present  chapter. 

693.  Equity  averse  to  displacing  trustee  under  express  trust. 

694.  Testamentary  trusts;  relief  granted  when  trustees  under  will 

refuse  to  act. 

695.  Court  will  only  consider  probability  of  trust  estate  being  wasted ; 

bad  habits  and  unfitness  of  trustee,  when  not  sufficient  ground. 

696.  Trust  for  management  of  public  lands  vested  in  state  officers ; 

court  reluctant  to  interfere. 

697.  Receiver  appointed  pendente  lite  in  action  to  remove  trustee  for 

unfitness ;  fraud ;  misconduct ;  breach  of  trust. 

698.  Mingling  funds  by  trustee,  when  not  sufficient  ground ;  relief  not 

granted  because  productive  of  no  harm. 

699.  Receiver  granted  heir-at-law  over  lands  fraudulently  conveyed 

by  trustee. 

700.  When  devisee  of  personal  property  entitled  to  relief  as  against 

husband  of  a  deceased  wife. 

701.  Litigation  to  revoke  probate  of  will  no  ground  for  receiver. 

702.  Refused  as  against  trustee  of  persons  interested  under  contract 

for  public  works. 

703.  Courts  averse  to  appointing  as  receivers  persons  occupying  fidu- 

ciary relations ;  when  departure  from  rule  permissible. 

704.  When  management  of  estate  transferred  from  receiver  to  new 

trustees. 

705.  When  granted  over  pension  paid  by  trustee. 

§  692.     The  appointment  of  receivers  is  frequently  neces- 
sary in  cases  of  trusts,  either  express  or  implied,  as  against 


CHAP.  XVI.]  TRUSTS.  5S7 

trustees  and  persons  occupying  fiduciary  relations,  and  the 
principles  governing  this  branch  of  the  subject  may  be  ap- 
propriately referred  to  the  general  jurisdiction  of  courts  of 
equity  over  trusts.  Strictly  speaking,  many  of  the  cases  in 
which  relief  is  granted  by  appointing  a  receiver  over  cor- 
porations, are  dependent  to  a  considerable  degree  upon  the 
doctrine  of  trusts,  the  officers  of  a  corporation  occupying 
a  fiduciary  relation  toward  its  shareholders  and  creditors, 
and  the  abuse  of  their  trust  constituting  a  frequent  ground 
for  the  interference  of  equity  by  a  receiver.  The  principles 
governing  the  relief,  in  such  cases,  have  been  elsewhere 
treated,1  and  it  is  proposed,  in  the  present  chapter,  to  con- 
sider the  subject  only  in  its  application  to  cases  of  express 
trust,  such  as  those  created  under  wills,  cases  of  executors 
and  administrators,  of  infancy  and  of  lunacy. 

§  693.  It  may  properly  be  observed,  at  the  outset,  that 
the  courts  are  averse  to  the  displacement  by  a  receiver  of  a 
trustee  under  an  express  trust,  unless  for  good  cause  shown.2 
And  equity  will  not,  at  the  instance  of  one  of  several  parties 
interested  in  an  estate,  displace  a  competent  trustee  in  whom 
the  estate  has  been  vested  by  the  testator,  and  take  the  pos- 
session from  him  and  place  it  in  the  hands  of  a  receiver, 
unless  he  willfully  or  ignorantly  permits  the  property  to  be 
placed  in  a  condition  of  insecurity,  which  might  be  pre- 
vented by  due  care.3  So  when  a  trustee  has  been  in  posses- 
sion of  the  property  in  controversy  in  the  administration 
of  his  trust  for  many  years,  upon  a  bill  for  his  removal  the 
court  will  not  appoint  a  receiver  before  answer  when  it  is 
not  shown  that  there  is  any  great  or  impending  danger  to 
the  property  or  fund,  or  that  plaintiff  will  suffer  irreparable 
loss  by  delay.4  And  in  an  action  to  set  aside  an  assignment 
of  his  goods  by  a  debtor  to  a  trustee  for  the  benefit  of 

1  See  chapter  X,  ante.  306.    And  see  Poythress  v.   Poy- 

2  Barkley  v.  Lord  Reay,  2  Hare,  thress,  16  Ga.,  406;  Orphan  Asylum 
306;  Hatcher  v.  Massey,  60  Ga.,  66;  v.  McCartee,  Hopk.  Ch.,  439. 
Latham  v.  Chafee,  7  Fed.  Rep.,  525.        4  Latham  v.  Chafee,  7  Fed.  Rep., 

3  Barkley  v.  Lord  Reay,  2  Hare,  525. 


58S  RECEIVERS.  [CHAP.  XVI. 

creditors,  upon  the  ground  of  fraud,  a  receiver  will  not  be 
appointed  over  the  property  held  by  such  trustee  pending 
the  determination  as  to  the  good  faith  of  such  assignment, 
the  fraud  being  denied  and  the  trustee  being  solvent  and 
able  to  respond  to  any  damages  which  may  be  recovered 
against  him.1  But  if,  in  such  a  case,  the  defendants  are  in- 
solvent, and  there  is  probable  ground  for  believing  that  the 
goods  will  be  fraudulently  disposed  of  before  a  hearing 
upon  the  merits,  a  receiver  may  be  allowed,  if  plaintiff  shows 
a  reasonable  probability  that  he  will  ultimately  succeed  in 
the  action.2 

§  694.  When  a  trust  created  by  a  will,  to  receive  the 
rents  and  profits  of  real  estate  belonging  to  the  testator, 
devolves  upon  a  court  of  chancery,  there  being  no  person  to 
manage  the  trust,  one  of  the  trustees  having  died  and  the 
others  refusing  to  act,  a  proper  case  is  presented  for  the  ap- 
pointment of  a  receiver  to  take  charge  of  the  rents  and 
profits  of  the  realty,  upon  a  bill  filed  by  an  heir-at-law  and 
devisee  under  the  will  to  have  the  question  of  its  validity 
and  of  his  rights  thereunder  determined.  Under  such  cir- 
cumstances, a  receiver  becomes  necessary  for  the  preserva- 
tion of  the  rents  and  profits,  in  order  that  a  proper  decree 
may  be  made  as  to  their  disposition  upon  the  final  deter- 
mination of  the  suit.3  And  when  property,  real  and  per- 
sonal, has  been  devised  to  trustees,  to  be  held  upon  certain 
trusts  declared  in  the  will,  and  some  of  the  trustees  refuse 
to  act,  a  receiver  may  be  appointed  when  all  parties  in  inter- 
est are  before  the  court  and  consent  to  the  appointment.4 

§  695.  Upon  a  bill  filed  by  the  cestui  que  trust  against  a 
testamentary  trustee,  seeking  an  account  of  his  trust  and  a 
receiver  to  take  charge  of  the  property  ad  interim,  the  only 
oround  for  relief  which  the  court  will  consider  is,  whether 
the  trust  estate  is  likely  to  be  wasted  before  the  termination 
of  the  litigation.     And  when  this  is  not  shown,  the  alleged 

iLevenson  v.  Elson,  88  N.  C,  3McCosker  v.  Brady,  1  Barb.  Ch., 
182.  329. 

2EUett  v.  Newman,  92  N.  C,  519.        *Brodie  v-  Ban7>  3  Meriv.,  695. 


CHAP.  XVI.] 


TRUSTS. 


589 


bad  habits  of  the  trustee,  and  his  unfitness  to  execute  the 
trust  devolved  upon  him  by  the  testator's  will,  are  not  suffi- 
cient to  warrant  a  court  of  equity  in  the  exercise  of  its 
extraordinary  powers  by  the  appointment  of  a  receiver.1 

§  696.  In  the  case  of  a  trust  created  by  an  act  of  legis- 
lature and  vested  in  certain  public  officers,  who  hold  their 
trust  ex  officio,  a  portion  of  the  duties  required  of  them  be- 
ing of  a  public  nature,  equity  is  extremely  averse  to  inter- 
fering by  a  receiver,  and  it  must  be  a  very  strong  case 
which  will  justify  the  court  in  taking  the  property  out  of 
the  control  in  which  it  has  been  placed  by  the  legislature, 
and  putting  it  into  the  hands  of  its  own  officers.  Thus, 
when  the  legislature  of  a  state  has  vested  certain  public 
lands  belonging  to  the  state  in  the  governor  and  other  state 
officers  as  trustees,  to  constitute  an  internal  improvement 
fund,  and  to  serve  as  a  guaranty  of  bonds  to  be  issued  by 
certain  railway  companies,  and  the  trustees  are  authorized 
to  fix  the  prices  of  the  lands,  and  to  make  provision  for 
their  drainage,  settlement  and  cultivation,  the  court  will  not 
interfere  by  a  receiver  except  for  the  most  cogent  reasons, 
nor  until  every  other  remed}r  has  been  tried  in  vain.2 

officers  from  the  trust,  and  to  put 
appointees  of  its  own  in  their  stead. 
If  they  are  guilty  of  breach  of 
duty,  they  can  be  enjoined;  they 
can  be  made  personally  responsible ; 
the  fund  can  be  followed  in  the 
hands  of  persons  getting  hold  of  it 
in  a  fraudulent  manner.  It  would 
be  very  strange  if  the  courts  could 
not  in  some  way  secure  the  rights 
of  parties  having  an  interest  in  the 
fund,  without  removing  from  the 
trust  those  official  personages  to 
whose  administration  it  has  been 
entrusted  by  the  legislature.  The 
court  will  not  shut  its  eyes  to  the 
fact  that  these  officers  are  con- 
stantly being  changed  by  the  suf- 
frages of  the  people  of  the  state  and 
the  constituted  power  of  appoint- 


1  Poythress  v.  Poythress,  16  Ga., 
406. 

2  Vose  v.  Reed,  1  Woods,  647.  Mr. 
Justice  Bradley  observes,  p.  651,  as 
follows:  "Now  these  public  and 
political  objects  of  the  trust  make 
it  extremely  fitting  that  the  chief 
executive  officers  of  the  state  should 
administer  the  fund.  And  it  must 
be  a  very  strong  case,  indeed, 
which  will  induce  the  court  to  take 
the  property  out  of  their  hands  and 
put  it  into  the  hands  of  its  own 
officers.  The  legislature  has  seen 
fit  to  entrust  the  chief  officers  of 
the  state  with  these  important  du- 
ties, and  it  would  show  a  great  dis- 
respect to  this  co-ordinate  branch 
of  the  government  for  the  judiciary, 
on  light  grounds,  to  displace  these 


590  RECEIVERS.  [CHAP.  XVI. 

§  697.     Notwithstanding  the  aversion  already  indicated, 
which  courts  of  equity  entertain  toward  the  appointment 
of   receivers  to   displace  trustees   except  for  good   cause 
shown,  it  has  been  held,  when  the  object  of  the  action  was 
the  removal  of  a  trustee  from  his  trust  on  the  ground  of 
unfitness,  that  the  court  might  properly  appoint  a  receiver 
pendente  lite,  the  propriety  of  the  relief ,  in  such  a  case,  being 
regarded  as  a  matter  resting  in  the  discretion  of  the  court 
to  which  the  application  was  addressed.1     And  when  land 
is  devised  to  a  trustee,  to  hold  and  manage  it  and  to  pay 
the  rents  and  income  to  certain  beneficiaries,  the  insolvency 
of  the  trustee  and  his  misapplication  of  the  proceeds  of 
sales  of  the  property,  and  his  failure  to  apply  the  income  in 
accordance  with  the  terms  of  the  trust,  and  his  appropria- 
tion of  such  income  to  his  own   use,  constitute  sufficient 
ground  for  an  injunction  and  a  receiver  in  an  action  by  the 
beneficiaries  for  an  accounting.2     So  the  failure  of  trustees, 
to  whom  leasehold  property  is  devised  upon  certain  specified 
trusts,  to  keep  the  premises  in  proper  repair,  and  thereby 
to  prevent  a  forfeiture  of  the  leasehold,  has  been  held  to  be 
sufficient  ground  for  appointing  a  receiver  of  the  rents  for 
the  purpose  of   applying  them  to  needed  repairs.3    And 

ment ;  and  it  would  be  very  incon-  ter  the  trust?  How  could  the  court 
venient  and  awkward  for  the  court,  take  cognizance  of  the  require- 
by  the  appointment  of  a  receiver,  to  ments  of  a  vast  political  territory 
withhold  the  property  from  the  in  reference  to  drainage,  develop- 
possession  and  management  of  new  ment,  pre-emption  and  population? 
state  officers,  fresh  from  the  confi-  It  woidd  be  a  Herculean  task  for  a 
dence  of  the  people,  and  against  court,  or  the  rec?iver  of  a  court,  to 
whom  no  charges  of  incapacity  or  perform.  I  do  not  feel  that  I  ought 
want  of  integrity  have  been  made,  to  take  the  trust  fund  out  of  the 
To  my  mind  it  seems  to  be  a  case  hands  of  the  state  officers,  in  this 
in  which,  if  a  receiver  can  be  ap-  case,  and  place  it  in  the  hands  of  a 
pointed  at  all,  the  appointment  receiver.  The  motion  for  a  receiver 
ought  not  to  be  made  until  every  is  therefore  denied." 
other  remedy  has  been  tried  in  l  Janeway  v.  Green,  cited  in  note 
vain.  Besides,  looking  at  the  pecul-  to  Darrow  v.  Lee,  16  Ab.  Pr..  315. 
iar  and  important  duties  attaching  2  Albright  v.  Albright,  91  N.  G, 
to  the  trust,  how  could  a  receiver,  220. 

how   could   a   court,  without  the  3  In  re  Fowler,  16  Ch.  D.,  723. 
greatest  embarrassment,  adminis- 


CHAP.  XVI.]  TRUSTS.  591 

when  a  trustee  violates  the  express  conditions  of  his  trust 
by  loaning  funds  contrary  to  the  provisions  of  the  instru- 
ment by  which  the  trust  is  denned,  and  by  loaning  a  portion 
of  such  funds  to  a  banking  firm  of  which  he  is  a  member, 
and  which  soon  afterward  becomes  insolvent,  sufficient 
ground  is  afforded  to  justify  the  appointment  of  a  receiver. 
Nor  can  the  conduct  of  the  trustee,  in  such  case,  be  justified 
by  the  fact  that  he  took  securities  for  the  loan  which  he  re- 
garded as  good  and  sufficient  at  the  time.1  So  when  lumber 
is  sold  to  be  used  in  a  building  upon  particular  premises, 
the  seller  being  ignorant  that  such  premises  are  held  in  trust 
by  the  purchaser,  but  believing  them  to  be  his  individual 
property,  and  the  building  erected  with  such  lumber  proves 
beneficial  to  the  trust  estate,  adding  to  its  permanent  value 
and  increasing  its  rentals,  if  the  trustee  is  insolvent,  a  re- 
ceiver may  be  appointed  to  collect  the  rents,  nothing  having 
been  paid  for  the  material  or  for  the  erection  of  the  build- 
ing.2 And  under  the  Supreme  Court  of  Judicature  Act  in 
England,  when  a  defaulting  trustee  has  been  ordered  to  pay 
money  into  court  which  is  due  from  him  in  respect  to  an 
alleged  breach  of  trust,  and  he  has  gone  beyond  the  jurisdic- 
tion of  the  court,  so  that  the  order  can  not  be  enforced  by 
attachment,  the  appointment  of  a  receiver  over  his  propert  v 
is  an  appropriate  remedy  for  enforcing  the  order.3 

§  698.  Where  by  his  will  a  testator  devises  real  estate  to 
trustees  for  the  purpose  of  carrying  out  the  provisions  of 
the  will,  it  is  not  sufficient  ground  for  appointing  a  receiver 
to  take  the  property  from  the  custody  of  the  trustees,  that 
one  of  them  has  mingled  the  trust  fund  with  his  own  private 
funds,  when  it  is  not  alleged  that  the  fund  is  in  danger,  and 
when  it  is  not  denied  that  he  keeps  a  proper  account  of  the 
fund.     And  the  court  will  not,  in  such  a  case,  appoint  a  re- 


*  North  Carolina  R.  Co.  r.  Wilson,  See,     also,     Stanger     Leathes    v. 

81  N.  C,  223.  Stanger    Leathes,  Weekly    Notes, 

2  Malone  v.  Buice,  60  Ga.,  152.  1882,  p.  71. 

3  In  re  Coney,  29  Ch.  D.,  993. 


592  RECEIVERS.  [cHAr.  XVI. 

ceiver  merely  upon  the  ground  that  it  can  be  productive  of 
no  harm.1 

§  699.  Upon  a  bill  by  an  heir-at-law  as  cestui  que  trust, 
against  a  trustee  and  others  to  whom  the  trustee  has  con- 
veyed real  estate  in  which  the  plaintiff  claims  an  equitable 
interest,  the  object  of  the  bill  being  to  set  aside  the  convey- 
ance as  a  fraud  upon  the  cestui  que  trust,  it  is  proper  for  the 
court  to  decree  that  defendants  convey  the  property  to  a 
receiver  to  be  appointed  by  the  court,  and  that  such  re- 
ceiver be  authorized  to  sell  and  convey  the  lands,  and  out 
of  the  proceeds  to  pay  the  amount  due  to  the  plaintiff 
under  a  former  decree  against  the  trustee.  And  while  such 
a  remedy  may  justly  be  regarded  as  a  summary  one,  it  is 
yet  a  proper  exercise  of  the  discretionary  powers  of  a  court 
of  equity  as  against  a  wrong-doer,  and  the  court  will  not 
compel  the  cestui  que  trust  to  resort  to  a  sale  by  execution.2 

§  700.  When  personal  property  has  been  bequeathed  to 
defendant's  wife,  with  an  executory  devise  over  to  plaintiff 
upon  the  death  of  defendant's  wife  without  issue,  and  upon 
such  death  defendant,  the  husband,  takes  possession  of  the 
property,  the  devisee  is  entitled  to  a  receiver,  in  an  action 
for  an  accounting  and  to  recover  possession  of  the  property, 
upon  showing  that  the  defendant  in  possession  is  irrespon- 
sible, having  conveyed  away  his  real  estate  and  having  no 
property  subject  to  execution.  Under  such  circumstances, 
the  danger  to  the  fund  in  controversy  is  regarded  as  suf- 
ficient ground  for  the  interposition  of  a  court  of  equity 
pendente  lite? 

§  701.  While  there  are  frequent  instances  where  the 
English  Court  of  Chancery  allowed  receivers,  pending  liti- 
gation as  to  the  probate  of  a  will,  when  the  relief  was 
necessary  for  the  preservation  of  the  estate,  the  fact  that, 

1  Orphan  Asylum   v.    McCartee,  justify  a  court  in  appointing  a  re- 

Hopk.  Ch.,  429.  ceiver  over  real  estate  held  in  trust 

2Gunn  v.  Blair,  9  Wis.,  352.  for  a  wife  who  is  entitled  to  a  por- 

3Ladd  v.  Harvey,  21  N.  H.,  514.  tion  of  the  annual  income  there- 

As  to  the  circumstances  which  will  from,  see  Robert  v.  Tift,  60  Ga.,  566. 


CHAP.  XVI.]  TRUSTS.  593 

after  a  will  has  been  duly  admitted  to  probate,  litigation  is 
instituted  to  recall  or  revoke  the  probate,  does  not  of  itself 
constitute  sufficient  ground  to  justify  a  court  of  equity  in 
interfering  by  a  receiver  with  the  possession  of  the  parties 
entitled  thereto  under  the  probate.1 

§  702.  Where  there  are  different  parties  in  interest  in 
the  profits  of  a  contract  for  the  performance  of  certain  pub- 
lic work,  and  a  trustee  has  been  appointed  to  receive  the 
money  due  thereon  and  to  pay  it  over  to  the  parties  in  in 
terest,  a  receiver  will  not  be  appointed  to  take  charge  of  the 
contract  upon  the  application  of  one  only  of  the  parties, 
who  holds  but  a  small  interest,  and  when  it  is  manifest  to 
the  court  that  the  appointment  may  result  in  destroying  the 
value  of  the  contract,  and  when  no  misconduct  is  shown 
against  the  trustee.2 

§  703.  Courts  of  equity  have  always  been  extremely 
averse  to  the  appointment  as  receivers  of  persons  occupying 
fiduciary  relations  toward  the  property  or  estate  forming 
the  subject-matter  of  the  receivership,  and  as  a  general  rv  le, 
a  trustee  of  an  estate  will  not  be  appointed  receiver  foi  its 
management.3  The  reason  for  the  rule  is  found  in  the  fact 
that  the  court  expects  a  trustee  to  watch  the  proceedings 
with  an  adverse  eye,  to  see  that  the  receiver  does  his  duty.4 
Where,  however,  considering  the  trustee's  knowledge  of  the 
estate,  it  seems  advisable  and  for  the  best  interests  uf  the 
estate  that  he  should  be  appointed,  a  departure  from  the 
rule  is  allowable,  but  only  upon  condition  that  he  shall  re- 
ceive no  compensation  for  his  services  as  receiver.5 

§  704.  When  real  estate  has  been  devised  to  trustees 
upon  certain  specified  trusts,  and  a  receiver  of  the  estate  is 
appointed  upon  the  ground  of  their  misconduct  and  inca- 

» Newton  v.  Ricketts,  10  Beav.,  < Sykes  v.  Hastings,  11  Ves.,  363. 

525.  5Hibbert    v.    Jenkins,    cited    in 

2 Devlin  v.  Hope,  16  Al>.  Pr.,  314.  Sykes  v.   Hastings,    11    Ves.,   363. 

3 v.   Jolland,   8  Ves.,  72;  See,    also,    Newport    v.    Bury,    23 

Sykes  v.   Hastings,    11   Ves.,    363;  Beav.,  30. 
Sutton  v.  Jones,  15  Ves.,  584. 
38 


594  RECEIVEKS.  [CHAP.  XVI. 

parity,  it  is  proper,  upon  the  appointment  of  new  trustees, 
that  the  management  of  the  estate  should  be  transferred 
from  the  receiver  to  such  new  trustees,  and  the  court  will 
so  order,  if  satisfied  that  it  may  be  done  without  injury  to 
the  legatees  under  the  will,  and  when  it  is  apparent  that  it 
will  result  to  the  advantage  of  the  estate  by  doing  away 
with  the  expense  of  the  receivership.1 

§  705.  A  receiver  has  been  appointed  over  a  government 
pension,  which  had  been  paid  through  a  trustee,  when  the 
trustee  had  refused  payment,  and  had  put  a  stop  to  the  pen- 
sion and  then  gone  beyond  the  jurisdiction  of  the  court.2 

^ainbrigge  v.  Blair,  3  Beav.,  2Noad  v.  Backhouse,  2  Y.  &  C. 
421.  C.  C,  529. 


CHAP.  XVI.]  TRUSTS.  595 


II.  Receivers  Over  Executors  and  Administrators. 

§  706.     Courts  averse  to  interference;  doctrine  of  quia  timet;  imminent 
danger  must  be  shown. 

707.  Executor  not  displaced  upon  slight  grounds ;  nor  upon  charges 

made  on  information  and  belief ;  must  be  shown  to  be  irre- 
sponsible. 

708.  Serious  waste  and  mismanagement  giound  for  relief;  incapacity 

of  husband  of  executrix ;  breach  of  trust. 

709.  Receiver  not  allowed  because  of  executor's  poverty ;  nor  when 
charges  of  bill  are  denied  by  answer. 

710.  Misconduct  in  addition  to  insolvency  ground  for  relief ;  receiver 

may  act  with  solvent  executor ;  executors  required  to  surrender 
books  and  assets. 

711.  Actual  bankruptcy  ground  for  receiver. 

712.  Removal  of  executor  from  state  sufficient  cause 

713.  Receiver  allowed  by  English  Court  of  Chancery  over  foreign  ex- 

ecutors or  estates. 

714.  Receiver  granted  in  England  pending  litigation  in  ecclesiastical 

court  concerning  probate  or  administration. 

715.  When  receiver  allowed  judgment  creditors  of  estate  as  against 

executor. 

716.  Not  allowed  when  it  would  interfere  with  administration. 

717.  Receiver  of  administratrix  in  personal  capacity  not  entitled  to 

rents  due  in  representative  capacity ;  action  to  recover  such 
rents, 

718.  Death  of  one  executor  and  refusal  of  another  to  act,  ground  for 

receiver ;  misunderstanding  between  executors  not  ground. 

719.  Plaintiff  equitably  interested  in  real  estate  devised  to  executors 

may  have  receiver  to  effect  sale, 

720.  Court  will  not  look  into  executor's  account  rendered  to  probate 

court. 

721.  Surety  on  administrator's  bond  can  not  have  receiver  on  default 

of  administrator  to  secure  him ;  surety  for  intestate, 

722.  When  receiver  allowed  in  behalf  of  ward  against  administrator. 

723.  On  removal  of  receiver  from  country,  executors  may  again  act, 

724.  Appointment  of  receiver  does  not  remove  executor. 

§  706,  The  jurisdiction  of  equity  by  the  appointment  of 
receivers  over  executors  and  administrators,  upon  the  ground 
of  an  abuse  of  their  trust,  although  well  established,  is 
nevertheless  exercised  with  extreme  caution,  and  the  courts 
are  exceedingly  averse  to  granting  the  relief  unless  in  press 


59G  RECEIVERS.  [CHAP.  XVI. 

mo-  cases,  since  it  is  for  the  testator  to  say  in  whom  the 
management  of  his  estate  shall  be  vested  after  his  decease.1 
And  while  courts  of  equity  have  unquestioned  power,  in  a 
proper  case,  to  take  the  administration  of  the  estate  of  a 
decedent  out  of  the  hands  of  his  administrator  or  executor, 
and  to  manage  it  by  a  receiver,  this  summary  relief  should 
only  be  granted  in  cases  of  manifest  danger  of  loss,  destruc- 
tion or  material  injury  to  the  estate.  It  is  only  under  ex- 
traordinary circumstances  that  equity  will  thus  wrest  the 
administration  from  the  hands  of  the  legal  representative, 
and  place  it  in  the  hands  of  a  receiver,  and  the  interference 
can  be  justified  only  by  evidence  of  gross  misconduct  or 
personal  disability.2  And  the  principle  on  which  the  relief 
is  granted,  in  this  class  of  cases,  is  said  to  rest  on  the  doc- 
trine of  quia  timet,  the  interference  being  justified  for  the 
prevention  of  a  future  and  probable  injury,  and  not  to  re- 
dress a  grievance  which  has  already  occurred.3  It  is,  there- 
fore, necessary  that  a  strong  case  should  be  shown  of 
imminent  danger  to  the  estate  unless  a  receiver  is  appointed. 
And  when  the  bill  fails  to  show  any  immediate  danger  of 
waste,  or  of  any  wrong  which  the  probate  court  may  not 
effectually  prevent,  and  the  charges  of  the  bill  are  wanting 
in  certainty,  a  court  of  equity  will  not  interpose  its  extraor- 
dinary aid  by  appointing  a  receiver.4 

!See  Powell  v.   Quinn,  49   Ga.,  3  Dougherty   v.    McDougald,    10 

523 ;  Harrup  v.  Winslet,  37  Ga. ,  655 ;  Ga. ,  121 . 

Dougherty  v.  McDougald,  10  Ga.,  4  Powell  v.  Quinn,  49   Ga.,  523. 

121;  Stairley  v.  Rabe,  McMul.  Eq.,  McCay,  J.,  observes,  p.  529:     "It 

22 ;  Brooker  v.  Brooker,  3  Sm.  &  ought  to  be  a  very  strong  case  in- 

G.,    475;    Hervey    v.    Fitzpatrick,  deed  to  justify  a  chancellor  in  ap- 

Kay,  421 ;  Middleton  v.  Dodswell,  pointing  a  receiver  and  taking  the 

13  Ves.,  266;  Rendall  v.  Rendall,  1  assets  of  an  estate  out  of  the  hands 

Hare,  152 ;  Steele  v.  Cobham,  L.  R.,  of  an  administrator  duly  appointed 

1  Ch.  App.,  325;  Haines  v.  Carpen-  by  the  court  of  ordinary.     The  or- 

ter,  1  Woods,  262.  dinary  has  constitutional  jurisdic- 

-  Harrup  v.  Winslet,  37  Ga.,  655;  tion  over  the  subject-matter,  and 

Dougherty  r.  McDougald,  10  Ga.,  special  reasons  should  appear  why 

121 ;  Brooker  v.  Brooker,  3  Sm.  &  that  jurisdiction  does  not  answer 

G.,  475.  the  ends  of  justice.     The  ordinary 


CHAP.  XVI.]  TRUSTS.  597 

§  707.  An  executor,  duly  appointed  by  the  will  of  a  tes- 
tator, who  has  qualified  in  the  proper  court  and  given  bond 
for  the  faithful  performance  of  his  duties,  and  who  has 
entered  upon  the  performance  of  his  trust  and  is  in  posses- 
sion of  the  estate,  will  not  be  displaced  upon  slight  grounds, 
and  a  strong  case  must  be  made  out  to  warrant  equity  in 
interfering  if  the  executor  is  willing  to  act.  It  does  not  fol- 
low, because  a  suit  is  instituted  against  him  by  a  person 
claiming  an  interest  in  the  estate,  that  the  trust  created  by 
the  testator  is  to  be  set  aside.  And  where  a  devisee,  claim- 
ing an  interest  in  the  estate,  files  a  bill  against  the  executor, 
to  enforce  the  trusts  of  the  will,  and  seeks  a  receiver  upon 
the  ground  of  the  executor's  incompetency  and  mismanage- 
ment, and  alleges  that  he  is  endeavoring  to  defeat  the  be- 
quest to  plaintiff,  and  that  he  has  confederated  with  others 
to  institute  fictitious  suits  against  the  estate  to  swallow  up 
the  assets,  the  court  will  not  appoint  a  receiver  if  these 
charges  are  made  only  upon  information  and  belief,  and  are 
not  supported  by  affidavits.  And  even  though  a  danger  to 
the  trust  property  is  established,  that  alone  will  not  suffice, 
but  it  must  also  appear  that  the  defendant  executor  in  pos- 
session is  irresponsible.1 

may  discharge  an  administrator  Fraud  is  charged,  and  misrepresen- 
and  appoint  another ;  he  may  re-  tation  in  obtaining  the  letters,  but 
quire  new  security,  and  he  may  no  specification  is  made,  no  facts 
compel  the  delinquent  administra-  detailed.  This  is  entirely  too  loose 
tor  to  account  and.  deliver  up  the  and  indefinite." 
property  as  well  as  a  court  of  chan-  i  Haines  v.  Carpenter,  1  Woods, 
eery  can  do  it.  There  is  no  charge  262.  The  principles  governing,  in 
in  this  bill,  as  far  as  the  assets  of  such  case,  are  very  clearly  stated  in 
Mrs.  Victoria  Quinn's  estate  are  tbe  opinion  of  Mr.  Justice  Woods,  as 
concerned,  that  shows  any  mime-  follows,  p.  265:  "The  party  in  pos- 
diate  imminent  danger  of  waste,  or  session  of  the  property  fen-  which  a 
of  any  wrong  which  the  ordinary  receiver  is  asked  is  the  executor 
may  not  effectually  grapple  with  named  in  the  will  of  the  testatrix. 
and  prevent.  The  charges  in  the  who  has  qualified  in  the  probate 
bill  are  wanting  in  certainty,  and  court  and  given  bond  for  the  faith- 
it  would  be  dangerous  to  use  the  ful  discharge  of  his  trust.  Under 
extraordinary  power  of  appointing  these  circumstances,  the  court 
a    receiver    on    such    allegations,  should  not  displace  him  upon  light 


.OS 


RECEIVERS. 


CHAP.  XVI. 


§  708.  While,  as  is  thus  seen,  a  strong  case  of  abuse  of 
trust  or  mismanagement  must  be  made  out  to  warrant  a 
court  of  equity  in  granting  a  receiver,  as  against  an  execu- 
tor of  an  estate  designated  by  the  testator's  will,  yet  when 
the  abuse  of  the  trust  is  manifest,  and  it  is  plainly  apparent 
that  there  have  been  serious  waste  and  misappropriation  of 
the  funds,  equity  may  properly  interfere  by  a  receiver.1 
Especially  is  this  true  when  the  mismanagement  is  shown, 
not  in  a  single  instance,  but  from  an  habitual  course  of  deal- 
ing, involving  the  property  in  danger,  and  when  the  other 
executors  consent  to  the  appointment.  The  court,  in  such 
case,  treats  an  executor  like  any  other  trustee,  and  will  take 


grounds.  And  though  a  suit  be 
instituted  by  a  party  having  an  in- 
terest in  the  estate,  it  does  not  fol- 
low that  the  trust  created  by  the 
testator  is  to  be  set  aside.  A  strong 
case  must  be  made  out  to  induce 
the  court  to  dispossess  a  trustee  or 
executor  who  is  willing  to  act. 
The  grounds  upon  which  this  court 
is  asked  to  dispossess  the  executor 
and  turn  over  the  property  of  the 
succession  to  a  trustee,  are  that 
Carpenter,  the  executor,  is  unfit 
and  incompetent  to  manage  and 
successfully  control  the  estate ;  that 
he  has  only  cultivated  a  part  of  the 
land  susceptible  of  cultivation, 
when,  in  the  opinion  of  the  com- 
plainants, all  of  it  should  have  been 
cultivated;  that  he  is  endeavoring 
to  defeat  the  bequest  to  the  said 
Baptist  church  by  depreciating  the 
value  of  the  estate,  and  that  he  is 
confederating  with  said  Elias  S. 
Dennis  to  institute  fictitious  suits 
against  the  estate,  in  order  to  sweep 
away  its  assets.  These  charges 
are  not  directly  made,  but  are 
stated  on  the  information  and  be- 
lief of  complainants,  and  they  are 
not  supported  by  a  single  affidavit 


to  any  fact.  The  application  to  ap- 
point a  receiver  must  be  supported 
by  evidence  showing  that  the 
appointment  is  necessary.  There  is 
absolutely  no  testimony  to  support 
the  application  in  this  case.  It  is 
true  that  one  of  the  complainants 
swears  to  the  bill,  but  in  doing  so 
he  only  swears  that  he  has  been 
informed  of  and  believes  certain 
statements  in  his  bill.  This  is  not 
evidence,  and  gives  no  support  to 
the  application.  The  fact  is  that 
the  court  is  asked  to  appoint  a  re- 
ceiver, in  this  case,  on  mere  rumor, 
without  any  proof  showing  the 
necessity  of  the  appointment. 
But  even  if  the  fact  were  estab- 
lished that  the  trust  property  was 
in  danger,  that,  of  itself,  would  not 
be  sufficient.  It  must  be  further 
shown  that  the  party  in  possession 
is  irresponsible.  There  is  no  proof 
that  the  executor  is  irresponsible, 
or  his  bond  insufficient,  nor  is  there 
any  averment  in  the  bill  to  that 
effect.  The  motion  for  a  receiver 
must,  therefore,  be  overruled." 

i  Middleton  v.  Dodswell,  13  Ves., 
266 ;  Stairley  v.  Rabe,  McMul.  Eq. , 
22. 


CHAP.  XVI.]  TRUSTS.  590 

from  his  bands  the  management  of  the  trust  if  he  has  been 
guilty  of  waste  and  gross  mismanagement.  And  in  such 
case,  the  appointment  may  be  made  before  defendant  has 
answered.1  So  when,  after  the  death  of  a  testator,  his 
widow  becomes  executrix  under  the  will,  and  she  afterward 
marries  and  entrusts  the  management  of  the  estate  to  her 
husband,  who  is  incapable  of  properly  conducting  it,  and 
under  whose  supervision  the  funds  are  misappropriated,  and 
the  estate  is  involved  in  debt,  an  appropriate  case  is  pre- 
sented for  a  receiver  upon  application  of  the  minor  heirs  of 
the  deceased.2  And  when  an  executor  has,  upon  his  own 
admission,  wasted  and  misappropriated  the  trust  funds  in 
his  hands,  and  refuses  to  disclose  how  and  where  he  has 
done  so,  and  has  permitted  a  co-executor  also  to  misappro- 
priate the  funds,  such  a  breach  of  trust  is  shown  as  to  clearly 
require  the  court  to  take  the  management  of  the  estate  out 
of  the  executor's  hands  by  placing  it  in  the  hands  of  a  re- 
ceiver. In  such  case,  the  assets  of  the  estate  will  be  deliv- 
ered to  the  receiver,  and  the  debts  will  be  paid  to  him,  but 
this  only  extends  to  assets  and  property  within  the  state 
and  debts  due  from  residents  of  the  state,  or  secured  upon 
property  therein.3  So  if  the  conduct  of  an  administrator  is 
such  as  to  hinder  and  impede  the  collection  of  the  debts 
due  to  the  estate,  a  receiver  may  be  appointed  to  collect 
and  hold  the  assets,  and  the  court,  in  such  case,  may  retain 
jurisdiction  for  the  purpose  of  finally  settling  the  estate.4 
And  when  an  executor  converts  both  the  real  and  personal 
estate  into  money  and  notes,  thus  giving  rise  to  a  reasonable 
apprehension  that  the  estate  is  not  sufficiently  secured,  in 
an  action  against  him  for  an  accounting  and  settlement  of 
his  trust,  the  court  may  properly  order  that  he  give  a  bond 
for  the  protection  of  the  estate,  and  to  secure  the  perform- 

iMiddleton  v.  Dodswell,  13  Ves.,  3 Price's  Executrix  v.  Price's  Ex- 

266.  ecutors,  8  C.  E.  Green,  428. 

2Stairley  v.  Rabe,  McMul.  Eq.,  <Du  Val  v.  Marshall,   30  Ark., 

22.  230. 


600  RECEIVEKS.  [CHAP.  X\T. 

ance  of  whatever  decree  ma}T  be  finally  recovered  against 
him,  or,  in  default  thereof,  that  a  receiver  be  appointed.1 

§  709.  Equity  will  not  interfere  by  a  receiver  with  the 
management  of  an  estate  in  the  hands  of  executors  merely 
upon  the  ground  of  their  poverty,  or  because  they  are  not 
in  affluent  circumstances,  when  no  suggestion  is  made  of 
improper  conduct,  especially  where  this  was  the  condition 
of  the  executor  at  the  time  of  his  appointment ;  since  the 
interference  upon  such  ground  would  have  the  effect  of 
changing  the  trust  created  by  the  will,  although  no  misbe- 
havior was  shown.  Unless,  therefore,  some  misconduct  or 
negligence  is  shown  on  the  part  of  the  executor,  or  some 
danger  of  a  loss  for  which  he  will  not  be  able  to  respond 
by  reason  of  his  poverty,  the  court  will  not  transfer  the 
management  of  the  estate  from  his  hands  to  those  of  a  re- 
ceiver.2 And  when  the  charges  of  the  bill,  as  to  insolvency 
and  mismanagement  of  the  business  by  the  defendant  ex- 
ecutor, are  fully  and  completely  denied  by  his  answer,  a 
receiver  should  not  be  allowed.3 

§  710.     Where,  however,  in  addition  to  insolvency,  serious 

JGray  v.  Gaither,  74  N.  C,  237.  hands  of  the  executor  on  account 

2  Knight  v.  Duplessis,  1  Ves. ,  324 ;  of  his  mean  circumstances ;  for  it 

Howard  v.   Papera,  1   Madd.,  141,  comes  to  that?    You  must  prove 

1st  American  edition,  p.  86;  Fair-  the  unfitness  of    the  person.     In 

bairn  v.  Fisher,  4  Jones  Eq. ,  390 ;  this  case,  the  only  ground  is  that 

Johns  v.  Johns,  23  Ga.,  31;  Anony-  she  is  not  a  person  of  proper t}'. 

mous,    12  Ves.,   4.     The  case  last  .     .     The  allegation  goes  no  further 

cited  was  a  motion  made  before  than  that  this  executrix  is  in  mean 

answer  for  a  receiver,   upon  the  circumstances.       If    any    miscon- 

ground  that  the  executrix  had  no  duct,  waste,   or  improper  disposi- 

other  property  than  an  annuity  of  tion  of  the  assets  were  shown,  the 

£20,  given  to  her  by  the  testator,  court    would    instantly    interfere ; 

Sir  William  Grant,  Master  of  the  but  at  present  no  case  is  made  for 

Rolls,  observes,  p.  5 :    "  There  is  no  a  receiver."    See  as  to  the  effect  of 

doubt  that  in  several  instances,  as  an  executor  having  engaged  in  a 

if  the    executor    has    wasted    the  hazardous  business  as  ground  for  a 

effects,  or  in  other  respects  miscon-  receiver  pendente  lite,  Bowling  v. 

ducted  himself,  this  court  will  in-  Scales,  2  Tenn.  Ch.,  63. 
terfere;  but    has    the    court    ever        3Fairbairn  v.  Fisher,  4  Jones  Eq., 

taken  the  disposition  out   of  the  390. 


CHAP.  XVI.]  TKUSTS.  601 

misconduct  is  shown  on  the  part  of  the  executor,  as  well  as 
danger  of  loss  to  the  estate,  a  different  case  is  presented, 
and  the  court  may  properly  interfere  by  a  receiver  to  pre- 
vent the  assets  from  being  wasted.  Tims,  upon  a  bill  filed 
in  behalf  of  the  heirs  of  an  estate,  showing  great  and 
unnecessary  delay  by  the  executors  in  settling  the  estate; 
that  some  of  the  heirs  have  received  large  sums  in  excess  of 
their  just  proportion ;  that  some  of  the  executors  have  mis- 
applied funds ;  and  that  three  of  the  four  executors  are  in- 
solvent, a  fitting  case  is  presented  for  the  interference  of 
equity  by  a  receiver.  Under  such  circumstances,  the  re- 
ceiver is  appointed  in  lieu  of  the  insolvent  executors,  to  act 
with  the  solvent  executor  if  the  latter  will  consent  so  to  act; 
otherwise  he  is  appointed  generally,  to  act  in  lieu  of  them 
all.  And  the  executors  will  be  required  to  deliver  over  to 
the  receiver,  under  oath,  all  books,  vouchers,  securities,  title 
deeds,  property  and  money  belonging  to  the  estate.1 

§  711.  While,  as  already  shown,  mere  insolvency  of  an 
executor  is  not  of  itself  sufficient  ground  for  a  receiver,  an 
actual  adjudication  in  bankruptcy  presents  much  stronger 
ground  for  the  relief.  And  where  a  sole  executor  and  trustee 
of  the  estate  of  a  deceased  testator  has  been  adjudged  bank- 
rupt, upon  his  own  petition,  and  assignees  of  his  estate  have 
been  appointed,  a  receiver  may  be  allowed  on  the  ground 
that  there  is  no  person  to  protect  the  assets,  the  assignees 
of  the  bankrupt  executor  having  no  power  to  interfere  with 
the  trust  estate.  And  it  is  not  a  sufficient  objection  to  the 
relief,  in  such  a  case,  that  the  assignees  have  not  been 
brought  before  the  court.2  So  where  an  executor  had 
become  bankrupt,  a  receiver  was  appointed  of  the  rents  and 
profits  of  the  real  estate,  but  without  prejudice  to  an  appli- 
cation by  the  next  of  kin  for  a  receiver  of  the  personalty 
when  the  will  should  be  proven.3 

1  Jenkins  v.  Jenkins,  1  Paige,  243.  141,  1st  American  edition,  86,  note 

-'Steele  v.  Cobhani,  L.  R.,  1  Ch.  a.     See,  also,  Langley  v.  Hawk,  5 

App.,  325.  Madd.,  46,  1st  American  edition, 

3Gladdonv.  Stoneman,  1  Madd.,  36. 


G02  RECEIVERS.  [CHAP.  XVI. 

§  712.  The  removal  of  an  executor  from  the  state,  leav- 
ing both  his  cestui  que  trust  and  the  trust  estate  within  the 
state,  is  sufficient  ground  for  the  interference  of  equity  by  a 
receiver,  upon  the  application  of  the  cestui  que  trust.  The 
court  proceeds,  in  such  a  case,  upon  the  ground  that  there 
is  an  abandonment  of  his  trust  on  the  part  of  the  executor, 
and  as  his  removal  places  him  beyond  the  jurisdiction  of  the 
court  and  out  of  reach  of  its  process,  he  is  no  longer  liable 
to  account.  It  is,  therefore,  the  duty  of  the  court  to  see  that 
such  removal  or  abandonment  does  not  prejudice  the  bene- 
ficiaries of  the  estate,  and  for  this  purpose  to  grant  them 
the  aid  of  a  receiver.1 

§  713.  The  aid  of  a  receiver  was  sometimes  granted  by 
the  English  Court  of  Chancery,  as  against  executors  or  ad- 
ministrators of  an  estate  situated  in  a  foreign  country. 
Thus,  where  a  person  claiming  to  be  administrator  of  an 
estate  situated  in  a  foreign  country  had  come  within  the 
jurisdiction  of  the  court  of  chancery,  and  had  brought  with 
him  a  portion  of  the  estate,  a  receiver  was  appointed  pen- 

^Ex  parte  Galluchat,  1  Hill  Eq.,  permit  him  to  remove  the   trust 

148.     The  court,   O'Neall,  J.,  say,  estate,  and  it  maybe  that,  under 

p.  151 :     "As  long  as  the  executor  circumstances  showing  that  it  was 

remains  within  the  jurisdiction  of  for  the  benefit  of  the  estate,  the 

the  court,  the  court  would  not,  un-  court  would  not  interfere  to  pre- 

less  under  very  extraordinary  cir-  vent  the  attorney  of  an  executor 

cumstances,   deprive    him    of  the  who  has  removed  from  the  state, 

management    of    the    trust;    yet  from  managing  the  trust   estate, 

when  he  removes  from  the  state,  But  generally,  when  an  executor 

will  the  court  permit  him,  either  to  removes  from  a  state,  leaving  both 

remove  the  trust  estate,  or  manage  his  cestui  que  trusts  and  the  trust 

it?    His  removal  places  him  beyond  estate  in  the  state,  it  is  the  duty  of 

the  process  of  the  court,  and  he  is  the  court  of  equity,  on  the  applica- 

no  longer  liable  to  account  to  it.  tion  of    the  cestui  que  trusts,  to 

His  removal  of    the    trust   estate  appoint    a    receiver.      For   there 

might  enable  him  to  defeat    the  would,  in  such  a  case,  be  an  aban- 

trust,  and  his  management  of  it  by  donment  of  the  trust,  voluntary  it 

attorney  might  place  it  in  irrespon-  is  true,  on  the  part  of  the  executor, 

sible  hands  and    have    the    same  and  which  can  not,  therefore,  bene- 

effect.     In  some  cases,  as  when  the  fit  him,  but  which  the  court  will 

executor  and  his  cestui  que  trusts  take  care  shall  not  prejudice  the 

remove  together,  the  court  would  cestui  que  trusts." 


CITAP.  XTT.J  TRUSTS.  603 

dente  lite,  upon  a  bill  by  the  English  administrator  to  pre- 
vent the  removal  of  the  assets  beyond  the  jurisdiction 
of  the  court,  although  no  misconduct  was  alleged  against 
the  defendant.1  So  an  executor  residing-  in  England,  the 
assets  of  the  deceased  being  in  India,  and  a  co-executor  in 
India  having  died,  was  allowed  a  receiver  of  the  property 
in  India,  but  was  required  to  give  sureties  resident  in  Eng- 
land.2 And  when  the  devisee  in  trust  and  the  executors  of 
the  will  of  a  deceased  testator  resided  beyond  the  jurisdic- 
tion of  the  court,  but  all  of  the  realty  and  part  of  the  per- 
sonalty were  in  England,  a  devisee  and  legatee  under  the 
will  resident  in  England  was  allowed  a  receiver  to  take 
charge  of  the  estate.3 

§  714.  Under  the  practice  of  the  English  Court  of  Chan- 
cery, receivers  were  sometimes  appointed  for  the  preservation 
of  an  estate,  pending  a  contest  in  the  ecclesiastical  courts 
over  the  probate  of  the  estate  and  the  right  to  administer.4 
And  while  that  court  proceeded  with  extreme  caution  in 
granting  a  receiver  as  against  an  executor  in  possession, 
when  it  was  not  yet  apparent  who  had  the  actual  right  to 
administer  the  estate,  yet  when  there  was  a  bona  fide  litiga- 
tion pending  in  the  ecclesiastical  court  to  determine  the 
right  to  probate  or  to  administer,  the  court  of  chancery 
would  properly  interfere  by  a  receiver,  not  because  of  the 
contest  over  the  probate,  but  because  there  was  no  proper 
person,  pending  such  contest,  to  receive  the  assets.5  Thus, 
upon  a  bill  by  one  claiming  to  be  an  executor,  showing  thai 
a  contest  was  pending  in  the  ecclesiastical  courts  as  to 
whether  the  deceased  left  any  testamentary  disposition  of 
his  property,  and  that,  pending  such  contest,  there  was  no 
person  legally  entitled  to  receive  any  part  of  the  effects  of 

1  Hervey  v.  Fitzpatrick,  Kay,  421.  152;  Wood  v.  Hitchings,  2  Beav., 

-Cockburn  v.  Raphael,  2  Sim.  &  289;  Anderson  v.  Guichard,  9  Ha re, 

St.,  453.  275. 

3  Smith  v.Smith,   10  Hare,  Ap-  5  Rendall  v.  Rendall,  1  Hare.  152; 

pendix,  lxxi.  Wood  v.  Hitchings,  2  Bear.,  289. 

•♦See  Rendall  v.  Rendall.  1  Hare,  See  S.  C,  3  Beav.,  504. 


COi  RECEIVERS.  [CHAP.  XVI. 

the  deceased,  the  court  would,  grant  a  receiver.1  The  main 
question,  in  such  case,  was,  whether  it  was  necessary  for  the 
protection  of  the  interests  of  all  persons  concerned  that 
there  should  be  a  receiver,  and  the  jurisdiction  of  equity  for 
this  purpose  being  clear,  it  afforded  no  objection  to  the  ex- 
ercise of  that  jurisdiction  that  there  was  no  person  in  whose 
name  an  action  might  be  brought  to  recover  the  property. 
iSTor  was  it  a  sufficient  objection  to  the  motion  for  a  receiver, 
that  the  bill  was,  to  a  considerable  extent,  a  bill  for  dis- 
covery.2 But  where  a  controversy  was  pending  between 
different  executors  of  the  same  estate,  and  the  right  to 
probate  the  estate  was  in  contest  in  the  proper  court,  and  an 
application  was  made  for  a  receiver  pendente  lite,  who  was 
appointed,  it  was  held  that  there  was  no  necessity  for  bring- 
ing such  application  to  a  final  hearing,  and  that  such  a 
practice  was  without  precedent.3 

§  715.  The  aid  of  a  receiver  is  sometimes  invoked  in  be- 
half of  judgment  creditors  against  executors.  And  when 
judgment  creditors  of  the  estate  of  a  deceased  person  show 
by  their  bill  that  the  executor,  who  has  been  removed  from 
his  trust,  has,  by  false  and  fraudulent  representations,  pos- 
sessed himself  of  a  large  fund  belonging  to  the  estate,  which 
he  has  misapplied,  and  that  he  is  wholly  irresponsible  and 
insolvent,  they  are  entitled  to  a  receiver  to  take  charge  of 
the  fund.  Such  a  case  is  regarded  as  presenting  strong 
grounds  for  the  interposition  of  equity  under  its  general 
power  over  trusts  and  trust  estates,  in  the  exercise  of  which 
power  a  receiver  is  frequently  indispensable.4     And  when  a 

1  Wood  v.  Hitchings,  2  Beav.,  289.  pointment  of  receivers  in  suits 
See  S.  C,  3  Beav.,  504.  against  executoi-s,  where  there  is 

2  Wood  v.  Hitchings,  2  Beav.,  danger  to  the  fund  without  such 
289.     See  S.  C,  3  Beav.,  504.  appointment;   so,   also,   if    he  has 

:i  Anderson  v.  Guichard,  9  Hare,  wasted  the  eff  ects,  or  in  other  re- 

275.  spects  has  misconducted  himself. 

4  Ex  parte  "Walker,  25  Ala.,  81.  Although  mere  poverty,  of  itself. 

"  Nothing  is  more  common  in  clian-  may  not  furnish  sufficient  ground 

eery  practice,"  say  the  coui't,  Chil-  for  the  appointment  of  a  receiver, 

ton,  C.  J.,  p.   104,  "than  the  ap-  as  against  an  executor,  yet  where 


CHAP.  XVI.]  TEUSTS.  605 

judgment  creditor  of  a  deceased  debtor  files  a  bill  against 
the  executor,  showing  that  he  has  given  no  security,  that  he 
is  insolvent  and  of  extravagant  habits,  and  that  he  is  mis- 
managing the  estate  and  is  about  to  leave  the  country,  and 
praying  an  injunction  and  a  receiver,  it  is  error  to  dismiss 
the  bill,  no  answer  being  filed  and  its  equities  not  being 
denied.1 

§  710.  Where,  however,  a  judgment  is  obtained  against 
a  debtor  and  a  creditor's  bill  is  filed  thereon  during  his  life- 
time, and  after  his  death  the  creditor's  suit  is  revived  against 
his  administrator,  a  receiver  will  not  be  appointed  over  the 
effects  of  the  deceased  on  the  application  of  plaintiff  in  the 
creditor's  suit.  In  such  case,  the  assets  are  to  be  disposed 
of  in  due  course  of  administration,  according  to  the  laws 
of  the  state,  and  the  priority  which  plaintiff  may  have 
gained  by  filing  his  bill  dies  with  the  defendant,  and  a  re- 
ceiver, in  such  case,  is  both  unnecessary  and  would  interfere 
with  the  due  course  of  administration.2  But  it  is  held  that 
if  a  receiver  had  already  been  appointed,  and  had  obtained 
possession  of  property  or  money  belonging  to  the  debtor, 
before  his  death,  the  court  appointing  him,  having  posses- 
sion through  its  officer,  would  not  part  with  that  possession 
to  the  executor  or  administrator,  but  would  apply  the  fund 
in  payment  of  the  debt,  due  regard  being  had  to  the  statu- 
tory rights  of  other  creditors.3 

§  717.  When  a  judgment  is  obtained  against  an  admin- 
istratrix in  her  personal  capacity,  and  a  receiver  is  appointed 
over  her  effects  in  aid  of  the  judgment  creditor,  such  re- 
ceiver is  not  entitled  to  the  rents  due  to  the  administratrix 

it  is  coupled  with  other  facts  or  of  his  authority  by  removal,  the 

circumstances,  showing  that  he  has  court,  in    all    such    cases,    should 

proceeded  not  in  accordance  with  promptly  secure  the  effects  by  plac- 

law  (as  where  he  has  iriade  private  ing  them  in  the  bands  of  a  receiver." 
sales  of  the  property  of  the  estate,        'Chapped  v.  Akin,  39  Ga.,  177. 
or  is  dealing  with  it  on  bis  private        '-'  Sylvester  v.  Reed,  3  Edw.  Cb., 

account),  especially  where  it  is  296;  Mathews  v.  Neilson,  id.,  346. 
doubtful  whether  he  is,  in  fact,  the        3  Mathews  r.  Neilson,  3  Edw.  Cb., 

legal  representative,  or  is  not  shorn  346. 


606  RECEIVERS.  [CHAP.  XVI. 

in  her  representative  capacity.  And  in  such  case,  tenants 
of  the  estate  have  a  right  of  action  to  recover  back  money 
thus  improperly  paid,  and  having  assigned  such  right  of 
action  to  the  administratrix,  she  may  maintain  the  action 
for  the  benefit  of  the  estate.1 

§  Y1S.  The  death  of  one  of  two  executors,  and  the  re- 
fusal of  the  other  to  act,  afford  abundant  reason  for  the 
interference  of  equity  by  appointing  a  receiver  to  take 
charge  of  the  assets,  upon  the  application  of  persons  bene- 
ficially interested  in  the  estate.2  But  the  mere  fact  of  a 
misunderstanding  existing  between  two  executors,  as  to  the 
management  of  the  estate  entrusted  to  their  charge,  is  not 
sufficient  ground  for  a  receiver  to  take  the  control  of 
the  estate  out  of  their  hands.3  If,  however,  a  receiver  is 
appointed  upon  the  ground  of  the  misconduct  of  one  of 
two  executors,  his  co-executor  not  having  qualified  as  such 
until  after  such  misconduct,  but  before  the  appointment  of 
the  receiver,  the  management  of  the  estate  will  not  be  re- 
stored to  such  co-executor  when  he  has  acquiesced  in  the 
appointment  without  objection  or  appeal.4 

§719.  A  receiver  has  been  allowed  for  the  purpose  of 
effecting  a  sale  of  real  estate  of  a  deceased  person,  which 
he  had  devised  to  his  executors,  but  in  which  plaintiff  was 
equitably  interested  under  an  agreement  with  the  deceased 
for  a  proportion  of  the  profits  arising  from  a  sale  of  the 
premises.  And  in  such  a  case,  the  ground  for  relief  would 
seem  to  be,  that  the  executors  occupy  to  a  certain  extent  a 
possession  adverse  to  that  of  the  plaintiff,  rendering  it  nec- 
essary that  an  impartial  person  be  appointed  to  make  the 
sale.5 

§  720.  Upon  a  bill  filed  against  an  executor  for  a  re- 
ceiver, upon  the  ground  of  his  alleged  waste  and  misman- 

i  Barker  v.  Clark,  12  Ab.  Pr.,  N.  «Fraser  v.  City  Council,  19  S.  C, 

S.,  106.  384. 

2  Palmer  v.  Wright,  10  Beav.,  234.  5  Marvine  v.  Drexel's  Executors, 

3 Fairbairn  v.  Fisher,  4  Jones  Eq.,  68  Pa.  St.,  362. 
390. 


CHAP.  XVI.]  TRUSTS.  607 

agement  of  the  estate,  it  is  not  competent  for  the  court  to 
look  into  the  accuracy  of  the  executor's  account  rendered 
to  the  probate  court,  with  a  view  to  support  the  grounds 
made  by  the  bill  for  a  receiver.  In  such  case,  the  probate 
court,  being  the  appropriate  tribunal  to  act  upon  the  execu- 
tor's account,  a  court  of  chancery  will  not  base  any  action 
upon  such  account,  having  no  control  or  jurisdiction  in  the 
premises.1 

§721.  Equity  will  not  entertain  a  bill  in  behalf  of  a 
surety  upon  the  official  bond  of  an  administrator,  to  compel 
the  administrator  to  give  security  to  plaintiff  for  his  obli- 
gation of  suretyship,  or  in  default  thereof  that  a  receiver 
be  appointed  of  the  estate  in  the  administrator's  hands. 
Such  a  case  presents  no  ground  for  the  aid  of  a  receiver, 
unless  the  relief  should  become  necessary  for  the  protection 
of  minor  heirs  of  the  estate  upon  the  refusal  of  the  probate 
court  to  appoint  guardians  of  such  minors.2  And  a  surety 
for  a  debt  due  from  one  who  has  died  intestate  can  not 
maintain  an  action  for  a  receiver  to  collect  the  assets  and 
to  administer  the  estate  of  the  deceased,  against  persons 
improperly  controlling  or  managing  the  assets,  without 
authority.3 

§  722.  "When  a  ward,  through  her  guardian,  files  a  bill 
against  the  administrator  of  the  estate,  showing  that  she 
is  entitled,  under  a  previous  decree,  to  a  specific  interest  in 
certain  lands  held  by  the  administrator,  a  receiver  may  be 
appointed  to  take  charge  of  the  land,  the  bill  showing  that 
the  administrator  is  committing  waste,  and  that  he  and  his 
sureties  are  wholly  insolvent.4 

1  Simmons  v.  Henderson,  Freern.  ties  upon  a  bond  given  for  the  pur- 
(Miss.),  493.  chase  money  at  such  sale,  the  ad- 

2  Delaney  v.  Tipton,  3  Hay  w.  ministrator  being  insolvent  and  in 
(Tenn.),  14.  possession  of  the  land,  see  Sten- 

3  Walker  v.  Drew,  20  Fla.,  908.  house  v.  Davis,  82  N.  C,  432. 

As  to  the  circumstances  which  will  4  Ware  v.  Ware,  42  Ga.,  408.  The 
warrant  a  receiver  over  real  estate  court,  Lochrane,  C.  J.,  say,  p.  411 : 
which  has  once  been  sold  by  an  "The  decree  gives  a  specific  inter- 
administrator,  upon  a  bill  by  sure-  est  in  this  property  to  the  com- 


COS  RECEIVERS.  [CHAP.  XVI. 

§  T23.  Where  a  receiver  had  been  appointed  because  of 
the  refusal  of  certain  executors  to  act  under  the  will  of  the 
testator,  but  he  subsequently  removed  from  the  country, 
and  the  executors  were  willing  to  act,  instead  of  appointing 
a  new  receiver  the  court  ordered  the  executors  to  act,  and 
directed  the  receiver  to  pass  his  accounts.1 

§  724  While  a  court  of  equity,  as  has  been  shown,  may, 
in  proper  cases,  enjoin  an  executor  from  proceeding  further 
with  his  duties,  and  may  appoint  a  receiver  to  take  charge 
of  the  estate,  to  be  administered  under  the  direction  of  the 
court,  such  appointment  does  not  have  the  effect  of  remov- 
ing the  executor,  since  the  power  of  removal  is  not  within 
the  jurisdiction  of  equity,  but  rests  in  the  probate  courts.'-' 
And  a  receiver  appointed  over  the  estate  of  a  deceased 
person  has  no  authority  to  interfere  with  suits  pending 
against  the  executor  at  the  time  of  such  appointment,  un- 
less authorized  by  the  court  so  to  do;  and,  in  the  ab- 
sence of  such  authority,  he  will  be  treated  as  a  stranger  to 

such  suits 

s 

plainant  to  the  amount  of  $2,850,  compel  a  settlement  of  the  interest 

and  operates  as  a  conveyance  to  by    decree    vested    in    this   ward, 

that  effect.     The  character  of  the  And  we  therefore  reverse  the  judg- 

litigation  now  develops  just  such  a  ment  of  the  court  below  dismissing 

case  as  belongs  particularly  to  a  the  biU  for  want  of  equity,  and 

court  of  equity  to  take  jurisdiction  direct  him  to  appoint  a  proper  re- 

of  and  determine.     This  ward  may  ceiver,  who  shall  take  custody  of 

lie  delayed  in  the  recovery  of  her  the    property,    protect    the    same 

rights,  "after  adjudication  by  the  from  waste  and  injury,  and  that 

courts,  interminably  by  the  intro-  all  parties  in  interest  be  cited  to 

duetion  of  new  matters  arising  out  appear,  and  be  made  parties  to  this 

of  the  facts  disclosed  by  the  record,  bill,  and  the  property  sold  for  the 

unless  the  chancellor  lays  his  hands  purpose    of    division    among    the 

on  this  property  and  compels  all  claimants." 

parties  in  interest  to  come  forward        »  Davy  v.  Gronow,  14  L.  J.,  N.  S. 

and  present  their  respective  claims  Ch.,  134. 

for    adjudication    and  settlement.        -  LeddeTs  Executor  v.  Starr,  4  C. 

It  would  end  in  a  multiplicity  of  E.  Green,  159. 
difficulties  to  refuse  now  to  exam-        3  Gadsden  v.  Whaley,  14  S.   C., 

ine   the   jurisdiction   invoked   and  210. 
interposed    by    proper    process    to 


CHAP.  XVI.]  TRUSTS.  COO 


III.  Receivers  Over  Estates  of  Infants. 

§  725.     Jurisdiction  founded  on  general  doctrine  of  trusts ;  misappropria- 
tion of  funds  by  husband  of  executrix  ground  for  receiver. 

726.  Relief  under  the  English  practice;  infant  tenant  in  tail  allowed 

receiver  on  absconding  of  executor. 

727.  Refusal  of  one  of  several  trustees  to  act  no  ground  for  receiver ; 

may  be  allowed  on  refusal  of  one  of  two. 

728.  When  receiver  allowed  on  behalf  of  infant  as  against  mortgagee 

in  possession  of  infant's  store. 

729.  Trustee  of  infant  ineligible  as  receiver ;  next  friend  ineligible ; 

when  executor  allowed  to  act. 

730.  When  receiver  of  infant's  estate  chargeable  with  interest  on  fail- 

ing to  invest  funds. 

731.  When  receiver  authorized  to  expend  money  for  relief  of  tenants. 

732.  Receiver  not  discharged  on  one  infant  corning  of  age  before  the 

other. 

§  725.  The  appointment  of  receivers  for  the  protection 
of  the  property  rights  of  infants,  as  against  executors  or 
other  persons  occupying  fiduciary  relations  toward  the  in- 
fant's estate,  rests  upon  the  general  doctrine  of  trusts  already 
discussed,  and  is  governed  by  the  same  general  principles. 
And  while  courts  of  equity  are  averse  to  interfering  with 
the  management  of  estates  by  executors,  even  in  behalf  of 
infants,  a  receiver  will  be  granted  in  a  clear  case  of  misman- 
agement and  misappropriation  of  the  funds,  or  of  hazard  to 
the  infant's  estate.  Thus,  when  an  executrix  entrusts  the 
control  of  the  estate  to  her  husband,  who  is  incapable  of 
properly  managing  the  ,trust,  and  under  whose  supervision 
the  funds  are  misappropriated  and  the  estate  is  involved  in 
debt,  a  fitting  case  is  presented  for  a  receiver  upon  the  appli- 
cation of  minor  heirs  of  the  deceased  testator.1 

§  720.  The  relief,  in  this  class  of  cases,  has  been  more 
frequently  granted  under  the  English  practice  than  in  this 

1  Stairley  v.  Rabe,  McMul.  Eq.,  22.     under  the  statutes  of  North  Caro- 
As  to  the  powers  and  functions  of    lina,  see  Temple  v.  Williams,  91  N. 
a  receiver  over  the  estate  of  a  ward    C. ,  82. 
upon  the  removal  of  a  guardian, 
39 


610 


RECEIVERS. 


[CHAP.  XVI. 


country,  and  the  jurisdiction  has  been  well  settled  in  that 
country  from  an  early  period.  And  upon  a  bill  by  an  in- 
fant tenant  in  tail  of  an  estate  which  had  been  in  posses- 
sion of  an  executor,  it  appearing  that  the  executor  had 
absconded  for  a  period  of  over  two  years,  and  that  there 
was  danger  of  the  property  being  lost  for  want  of  manage- 
ment, it  was  regarded  as  a  strong  case  for  a  receiver.1 

§  727.  "When  a  testator  has  devised  his  property  to  sev- 
eral trustees  to  carry  out  certain  trusts  specified  in  his  will, 
a  receiver  of  the  estate  will  not  be  appointed  in  behalf  of 
infant  heirs  merely  because  one  of  the  trustees  has  dis- 
claimed or  refused  to  act,  since  the  court  will  not  presume 
misconduct  on  the  part  of  the  other  trustees.2  But  where 
there  were  two  trustees  of  an  estate,  one  of  whom  had  never 
acted  and  declined  so  to  do,  a  receiver  was  appointed  of  the 
rents  and  profits  in  behalf  of  infant  cestui  que  trusts,  al- 
though the  other  trustee  was  desirous  of  acting.3 

§  728.  The  necessity  of  protecting  an  infant's  property 
and  estate,  when  it  is  not  vested  in  a  trustee,  but  is  in  the 
adverse  possession  of  a  person  hostile  to  the  infant's  inter- 
ests, may  afford  sufficient  ground  for  the  interference  of 
equity  by  a  receiver.  Thus,  when  an  infant  has  purchased  a 
stock  of  goods  for  purposes  of  trade,  and  has  mortgaged 
them  to  secure  payment  of  a  portion  of  the  purchase  mone}T, 
and  the  mortgagee  upon  default  takes  possession  of  all  the 
goods  in  plaintiff's  store,  including  other  goods  not  covered 
by  the  mortgage,  in  an  action  by  the  infant  to  disaffirm  the 
contract,  although  the  mortgagee  is  entitled  to  the  goods 
which  he  had  sold  to  the  infant,  yet  there  being  a  mixture 


i  Pitcher  v.  Helliar,  Dick.,  580. 
And  Lord  Thurlow  observed,  in  this 
case,  that  he  would  have  ordered  a 
receiver,  even  if  there  had  been  no 
bill  filed.  But  in  Anonymous,  1 
Atk.,  489,  it  was  said  that  there 
was  no  instance  of  appointing  a 
receiver  of  the  rents  and  profits  of 
an  infant's  estate,  when  there  was 


no  bill  depending  in  court :  but  that 
if  it  were  only  filed,  there  might  be 
an  application  for  a  receiver  on  be- 
half of  the  infants.  See,  also,  Ex 
parte  Whitfield,  2  Atk.,  315. 

2  Browell  v.  Reed,  1  Hare,  434. 

3Tait  v.  Jenkins,  1Y.&C.  C.  G, 
492. 


CHAP.  XVI.]  TEUSTS.  611 

of  the  property,  and  defendant  being  in  possession  and 
claiming  a  right  to  sell  the  whole  for  his  own  benefit,  a  re- 
ceiver may  be  allowed  until  the  respective  rights  of  the 
parties  can  be  ascertained.1 

§  729.  As  regards  the  selection  of  a  proper  person  to  be 
appointed  receiver  of  an  infant's  estate,  it  is  generally  held 
that  one  who  sustains  a  relation  of  trust  toward  the  infant 
is  ineligible  as  receiver,  the  two  characters  being  incom- 
patible.2 Thus,  when  a  bill  is  filed  by  the  next  friend  of 
infants  against  the  executors  of  an  estate  for  an  account- 
ing and  a  receiver,  the  next  friend  is  not  regarded  as  a 
proper  person  to  be  appointed,  since  it  is  his  duty  to  watch 
the  accounts  and  conduct  of  the  receiver,  and  the  two  char- 
acters are  incompatible,  and  can  not  be  united  in  the  same 
person.3  So  a  trustee  and  executor  of  an  estate  devised  to 
an  infant  is  not  ordinarily  eligible  as  receiver  of  the  estate ; 
and  this  is  so,  regardless  of  whether  he  is  a  sole  trustee,  or 
whether  there  are  others  joined  with  him  as  co-trustees.4 
But  where  a  testator  had  appointed  as  trustee  and  executor 
of  his  will  a  person  who  had  for  many  years  acted  as  re- 
ceiver of  a  portion  of  his  property,  he  was  regarded  as  a 
proper  person  to  be  continued  as  receiver  for  the  protection 
of  an  infant  tenant  for  life.5 

§  730.  Where  a  receiver  is  appointed  over  the  estate  of 
an  infant  during  his  minority,  the  infant  having  no  guard- 
ian, and  the  receiver  is  directed  by  the  decree  to  place  the 
surplus  rents  and  profits  during  infancy  at  interest,  as  fast 
as  they  amount  to  a  sufficient  sum  for  investment,  if  he  fails 
thus  to  invest  the  funds  he  will  be  liable  for  interest.  And 
in  such  a  case,  the  fact  that  the  infant,  immediately  on  com- 
ing of  age,  has  a  settlement  with  the  receiver,  and,  after 
looking  over  the  accounts,  admits  the  balance  in  the  re- 

i  Skinner  v.  Maxwell,  66  N.  C,  3  stone  v.  Wishart,  2  Madd.,  63, 

45.     See  S.  C,  68  N.  C,  400.  1st  American  Edition,  374. 

2  Stone  v.  Wishart,  2  Madd.,  63,        4 v,   Jolland,   8  Ves.,   72. 

1st  American  Edition,  374; v.  See,   also,   Sykes   v.   Hastings,   11 

Jolland,    8   Ves.,    72.      See,    also,  Ves.,  363. 

Sykes  v.  Hastings,  11  Ves.,  363.  8  Newport  v.  Bury,  23  Beav.,  30. 


C12 


RECEIVERS. 


[cHAr.  xv:. 


ceiver's  hands  to  be  correct,  and  receives  it  without  objec- 
tion, is  no  bar  to  charging  the  receiver  with  the  interest.1 

§  731.  In  the  Irish  Court  of  Chancery,  a  receiver  of  a 
minor's  estate  has  been  authorized  by  order  of  court  to  ex- 
pend money  belonging  to  the  estate  for  the  relief  of  tenants 
who  were  in  destitute  circumstances,  and  where,  owing  to 
the  failure  of  their  crops,  they  were  in  an  impoverished 
condition.2 

§  732.  A  receiver  appointed  for  the  protection  of  the  es- 
tate of  infants  will  not  be  discharged  until  the  object  of  his 
appointment  has  been  fully  attained.  Thus,  as  between 
tenants  in  common  of  real  estate,  two  of  whom  are  infants, 
when  a  receiver  is  appointed  for  the  protection  of  the  in- 
fants, with  directions  to  pay  to  the  adults  their  share,  he 
will  not  be  discharged  upon  the  application  of  one  of  the 
infants  on  his  coming  of  age,  the  other  not  yet  having  at- 
tained his  majority.3 


1  Hicks  v.  Hicks,  3  Atk.,  274. 

2  Jackson  v.  Jackson,  2  Hog.,  238. 


3  Smith  v.  Lyster,  4  Beav.,  227. 


CHAP.  XVI.]  TRUSTS.  6V 


IV.  Receivers  Ovee  Estates  of  Lunatics. 

§  733.  Jurisdiction  unquestioned,  but  seldom  exercised ;  when  receiver 
appointed  on  death  of  lunatic;  must  surrender  to  adminis- 
trator. 

734.  Relief  a  matter  of  discretion ;  when  refused,  there  being  rival 

heirs. 

735.  Solicitor  under  commission  of  lunacy  ineligible  as  receiver. 

736.  When  receiver  ordered  to  account ;  reference  to  master  to  ascer- 

tain condition  of  property  and  income. 

§  733.  A  receiver  is  sometimes  necessary  for  the  preser- 
vation of  the  estate  of  a  lunatic,  and  while  there  are  but  few 
reported  cases  bearing  upon  this  subject,  the  power  of  a 
court  of  equity  to  thus  interfere  is  unquestioned.  Upon  the 
death  of  a  lunatic  or  insane  person  whose  property  has 
been  managed  by  a  trustee  or  committee  appointed  by  the 
court  in  conformity  with  the  laws  of  the  state,  since  the 
trustee's  functions  terminate  with  the  death  of  the  lunatic, 
it  is  proper  for  a  court  of  chancery  to  appoint  a  receiver  to 
take  charge  of  the  assets  and  estate  until  it  may  be  deter- 
mined who  is  entitled  thereto.1  But  the  object  of  the  ap- 
pointment, in  such  case,  being  the  protection  of  the  estate 
until  it  may  be  determined  who  is  properly  entitled  to  pos- 
session, the  receiver  will  be  continued  only  while  such  ne- 
cessity exists.  And  when  the  proper  court  of  probate  has 
acquired  jurisdiction  over  the  estate  of  the  deceased,  and 
has  appointed  an  administrator  pendente  lite,  the  court  of 
chancery  will  surrender  the  possession  of  its  receiver,  and 
will  deliver  the  property  to  the  administrator  pendente  lit,'} 

§  734.  The  relief,  in  this  class  of  cases,  would  seem  to  be 
largely  a  question  of  judicial  discretion.  And  after  the 
death  of  a  lunatic,  whose  estate  had  been  in  her  life-time 
managed  by  a  committee,  there  being  two  rival  claimants 
as  heirs  of  the  estate,  each  of  whom  filed  a  bill  for  a  re- 

1  In  re  Rachel  Colvin,  3  Md.  Ch.,        2  In  re  Rachel  Colvin,  3  Md.  Ch., 

288.  288.. 


614  RECEIVERS.  [CHAP.  XVI. 

eeiver  of  the  estate  pending  the  litigation  as  to  their  rights, 
the  English  Court  of  Chancery  declined  to  interfere  by  the 
exercise  of  its  original  jurisdiction  for  the  appointment  of 
a  receiver,  treating  the  case  as  if  there  had  been  no  lunacy, 
and  allowing  the  application  to  be  made  in  the  first  instance 
before  the  vice-chancellor.1 

§  735.  One  who  sustains  such  a  relation  toward  the  estate 
of  a  lunatic  as  to  make  it  his  duty  to  call  the  receiver  to  an 
account  is  not,  upon  general  principles  of  equity,  eligible  as 
a  receiver.  Hence  a  solicitor  under  a  commission  of  lunacy 
should  not  be  appointed  receiver  of  the  lunatic's  estate.2 

§  736.  In  the  case  of  a  receivership  over  the  estate  of  a 
lunatic,  when  the  receiver  has  never  made  a  full  or  complete 
report  of  the  income  and  disbursements  of  the  estate  com- 
mitted to  his  charge,  any  party  to  the  cause  is  entitled  to 
move  for  such  an  account,  which  it  is  the  receiver's  plain 
duty  to  make  in  his  capacity  as  air  officer  of  the  court. 
And  the  court  may  thereupon  order  a  full  account  to  be 
taken  instanter  on  proper  notice.  And  it  may  also  order  a 
reference  to  ascertain  and  report  as  to  the  situation  of  the 
lunatic's  property ;  the  liens,  if  any,  upon  it ;  the  existing 
debts ;  the  probable  income  for  the  ensuing  year,  and  the 
probable  charges  thereon.  The  reference  may  also  be  di- 
rected to  ascertain  what  amount  of  the  income  from  the 
estate  will  be  needed  for  the  comfortable  support  of  the 
lunatic,  whose  interests  are  to  be  first  guarded.3 

1  In  re  Ferrior,  L.  R.,  3  Ch.  App.,  2Ex  parte  Pincke,  2  Meriv.,  452. 
175.  See  Carrow  v.  Ferrior,  id.,  3Lowe  v.  Lowe,  1  Tenn.  Ch., 
719.  515. 


CHAPTER  XYII. 

OF  RECEIVERS  IN  CONNECTION  WITH  INJUNCTIONS. 

I.  The  Remedies  Compared, ,    .    .    .  §  737 

IL  The  Remedies  as  Appld3d  to  Corporations, 749 

III.  Creditors'  Suits, 755 

IV.  Partnerships, 760 

V.  Re  at.  Property, 772 


I.  The  Remedies  Compared. 

§  737.  Points  of  resemblance ;  both  remedies  branches  of  the  prevent- 
ive jurisdiction  of  equity ;  neither  changes  title ;  discretionary 
nature. 

738.  Auxiliary  nature  of  the  remedies;  do  not  determine  ultimate 

rights  of  parties. 

739.  Principal  difference  consists  in  effect  on  possession. 

740.  Provisional  remedies  under  New  York  code ;  when  injunction  a 

bar  to  receiver  in  another  court. 

741.  Neither  remedy  granted  when  relief  may  be  had  at  law. 

742.  Long  acquiescence  a  bar  to  either  form  of  relief. 

743.  Distinct  nature  of  the  remedies ;  one  not  a  necessary  incident  of 

the  other. 

744.  Neither  remedy  applicable  to  determine  disputed  questions  of 

title  to  public  offices. 

745.  Either  may  be  granted  although  property  in  a  foreign  country. 

746.  Conflict  of    jurisdiction  between  state    and    federal  courts   a 

ground  for  both  remedies. 

747.  Injunctions  to  protect  receiver's  possession. 

748.  When  receiver  enjoined  from  litigation. 

§  737.  The  discussion  of  the  law  of  receivers,  as  thus  far 
developed,  has  shown  many  striking  points  of  resemblance 
between  this  branch  of  the  extraordinary  jurisdiction  of 
equity,  and  that  which  is  invoked  in  the  granting  of  prelim- 
inary or  interlocutory  injunctions.  The  two  remedies  are 
alike  branches  of  the  general  preventive  jurisdiction  of  courts 
of  equity,  and  are  prospective  rather  than  retrospective  in 


61(5  KECEIVEKS.  [CHAP.  XV.T. 

their  operation,  being  invoked  on  suitable  occasions  for  the 
prevention  of  future  injuries,  rather  than  for  the  redress  of 
grievances  already  committed.     Thus,  the  object  of  an  inter- 
locutory injunction  is  to  preserve  the  subject  in  controversy 
in  its  then  condition,  and,  without  determining  the  questions 
of  right  involved,  it  seeks  to  prevent  the  further  perpetra- 
tion of  wrong,  or  the  doing  of  any  threatened  act  which 
may  result  in  injury  to  the  rights  of  the  party  complaining.1 
So  the  object  sought  in  appointing  a  receiver  pendente  lite 
is  to  prevent  injury  to  the  thing  in  controversy,  the  res,  and 
to  preserve  it  unimpaired  for  the  security  of  all  parties  in 
interest,  that  it  may  be  disposed  of  in  accordance  with  the 
linal  decree  of  the  court.2     Both  are  extraordinary  remedies 
in  the  strict  sense  of  the  term,  as  distinguished  from  the 
usual  and  accustomed  modes  of  procedure  at  law  and  in 
equity,  since  they  seize  upon  and  control  the  subject-matter 
of  the  litigation  in  limine,  and  without  awaiting  the  final 
determination  of  the  court,  or  its  final  process.     Neither 
remedy  has  the  effect  of  changing  the  title,  or  of  creating 
any  special  lien  upon  the  property,  their  common  object 
being  only  to  sec  L.re  its  preservation,  until  the  rights  of  all 
parties  in  interest  may  be  fully  ascertained  and  judicially 
determined.3     And  both  remedies  rest,  to  a  considerable 
extent,  in  the  sound  judicial  discretion  of  the  court  to  which 
the  application  is  addressed,  to  be  governed  by  a  considera- 
tion of  all  the  circumstances  of  the  case.4 


*See  Murdoch's  Case,  2  Bland,  wood  v.  Cope,  25  Beav.,  151.    See, 

461 ;  Bosley  v.  Susquehanna  Canal,  as  to  the  application  of  the  same 

3  Bland  63.  doctrine  to  applications  for  receiv- 

2  Mays  v.   Rose,  Freem.    (Miss.),  ers,  Owen  v.  Honian,  3  Mac.  &  G., 

703.  378,  affirmed  on  appeal  to  the  House 

s Ellis  v.  Boston,  Hartford  &  Erie  of  Lords,  4  H.  L.  Rep.,  997;  Hani- 

R.  Co.,  107  Mass.,  1.  burgh  Manufacturing  Co.  v.  Edsall, 

4  See,  as  to  this  element  of  discre-  4  Halst.  Ch.,  141 ;  Pullan  v.  Cincin- 

tion  on  applications  for  intcrlocu-  nati  &  Chicago  R.  Co.,  4  Bissell, 

tory  injunctions,  United  States  v.  47;  Mays  v.  Rose,  Freem.   (Miss.), 

Duluth,  1  Dillon's  C.  C,  469;  Red-  703;  Whelpley  v.  Erie  Rail  way  Co., 

dall  v.  Bryan,  14  Md.,  444;  Hay-  6  Blatchf.,  271. 


CHAP.  XYII.]  INJUNCTIONS.  617 

§  738.  Another  point  of  resemblance  between  these  ex- 
traordinary equitable  remedies,  when  invoked  in  limine,  is 
that  they  are  of  a  provisional  or  auxiliary  nature,  and  fre- 
quently employed  merely  as  an  adjunct  to  the  principal  re- 
lief sought  by  the  action,  and  not  always  or  necessarily  the 
ultimate  or  principal  object  of  the  action.  And  the  grant- 
ing of  either  species  of  relief,  upon  an  interlocutory  appli- 
cation, is  not  a  final  determination  of  any  questions  of  right 
or  title  which  may  be  involved  in  the  litigation ;  and  the 
court,  in  passing  upon  the  application,  in  no  manner  antici- 
pates its  ultimate  judgment  upon  the  rights  of  the  parties, 
the  fundamental  idea  upon  the  preliminary  application  being 
only  to  preserve  the  fund  or  property  in  litigation  in  statu  quo, 
for  the  benefit  of  whoever  may  finally  be  determined  to  be  en- 
titled thereto.  The  court,  in  granting  the  relief,  only  recog- 
nizes that  sufficient  cause  is  presented  to  warrant  its  summary 
interference  in  limine,  and  until  a  final  hearing  on  the 
merits,  without  expressing,  and  frequently  without  having 
the  means  of  forming,  an  opinion  as  to  the  ultimate  rights 
of  the  parties.1  Indeed,  upon  an  interlocutory  application 
for  a  receiver,  if  plaintiff  shows  an  apparent  title  to  the 
thing  in  controversy,  and  presents  a  prima  facie  case,  and 
if  the  court  is  satisfied  that  there  is  imminent  danger  of 
loss  unless  it  shall  interpose  the  aid  of  a  receiver,  it  may 
grant  the  relief  without  further  investigation  into  the 
merits.2  And  since  the  court  is  bound  to  express  its  opinion 
only  so  far  as  to  show  the  grounds  upon  which  it  deter- 

1  See  this  doctrine  applied  to  inter-  expressed  by  McCoun,  Vice-Chan- 

locutory  applications  for  receivers,  cellor,  in  Leavitt  v.  Yates,  4  Edw. 

in  Hottenstein  v.   Conrad,  9  Kan.,  Ch.,    1G2.     For  its    application    to 

435;  Cooke  v.  Gwyn,  3  Atk.,689;  cases  of   preliminary  injunctions, 

Huguenin  v.  Baseley,  13  Ves.,  105;  see  Great  Western  R.  Co.  v.  Bir- 

Ellicott    v.    Warford,   4    Md.,   80;  rningham  &  Oxford  Junction  R. 

Blakeney  v.  Dufaur,  15  Beav.,  40;  Co.,  2  Ph.,  597. 

Leavitt  v.  Yates,  4  Edw.  Ch.,  162;  -'Leavitt  v.  Yates,  4  Edw.  Ch., 

Brown  v.  Northrup,  15  Ab.  Pr.,  N.  162;  Brown  v.   Northrup,    15  Ab. 

S.,  333;  Ex  parte  Walker,  25  Ala.,  Pr.,  N.  S.,  333. 
104.     The  doctrine  is  very  clearly 


618  RECEIVERS.  [CHAP.  XVII. 

mines  the  application,  it  will  usually  confine  itself  to  the 
point  which  it  is  called  upon  to  decide,  without  going  into 
the  merits  of  the  case  at  large.1 

§  739.  In  instituting  a  comparison  between  these  princi- 
pal extraordinary  remedies  of  equity,  the  most  striking 
point  of  difference  between  them  is  found  in  their  effect  or 
operation  upon  the  possession  of  the  fund  or  property  in 
litigation.  An  injunction  never  operates  to  change  posses- 
sion ;  a  receiver  always  and  necessarily  has  this  direct  and 
immediate  effect.  An  injunction  can  not  be  used  to  take 
property  out  of  the  custody  and  control  of  one  party  and 
place  it  in  the  possession  of  another ; 2  while  in  appointing 
a  receiver,  a  court  of  equity  at  once  wrests  possession  from 
the  defendant;  assumes  and  continues  by  its  officer  the 
entire  management  and  control  of  the  property  or  fund ; 
frequently  changes  its  form,  or  absolutely  disposes  of  it,  and 
usually  retains  this  exclusive  possession  until  the  rights  of 
all  persons  in  interest  are  finally  adjusted.  An  injunction 
merely  restrains  action,  and  aims  at  preserving  the  sub- 
ject-matter, as  well  as  the  attitude  of  all  parties  in  interest 
thereto,  in  statu  quo;  while  a  receivership  changes  at  once 
the  attitude  of  all  parties  toward  the  subject-matter  of  the 
litigation ;  divests  defendant's  possession,  and  interposes  the 
officer  of  the  court  as  a  custodian  of  the  property  or  fund, 
for  the  common  benefit  of  all  parties  concerned. 

§  740.  Under  the  code  of  procedure  prevailing  in  New 
York,  the  granting  of  injunctions  and  the  appointment  of 
receivers,  in  limine,  are  known  as  provisional  remedies,  and 
are  treated  by  the  courts  of  that  state  as  of  equal  weight 
and  importance.  And  while  the  two  remedies  are  fre- 
quently administered  in  one  and  the  same  action,  the  grant- 
ing of  an  injunction  by  a  court  of  competent  jurisdiction 
operates  as  a  bar  to  the  appointment  of  a  receiver,  in  a  sub- 
sequent proceeding  between  the  same  parties  in  another 

1  Skinners  Company  v.  Irish  So-  2  Murdoch's  Case,  2  Bland,  461 ; 
ciety,  1  Myl.  &  Cr.,  162.  Bosley    v.  Susquehanna   Canal,   3 

Bland,  63. 


CHAP.  XVII.]  INJUNCTIONS.  619 

court.  The  jurisdiction  of  the  court,  and  its  control  over  all 
subsequent  proceedings,  being  regarded  as  attaching  upon 
the  service  of  process,  or  the  allowance  of  a  provisional 
remedy,  when  the  court  first  moving  has  acquired  jurisdic- 
tion by  the  granting  of  an  injunction,  another  court  will  de- 
cline to  interfere.1 

§  741.  From  the  points  of  resemblance  between  these 
remedies,  which  have  been  already  indicated,  it  necessarily 
follows  that  certain  well-defined  and  elementary  principles 
by  which  courts  of  equity  are  governed  in  the  exercise  of 
their  extraordinary  jurisdiction,  are  equally  applicable  iu 
determining  applications  for  both  species  of  relief.  A 
controlling  principle  of  this  class,  and  one  which  is  be- 
lieved to  be  of  general  application,  is,  that  the  existence  of 
an  adequate  remedy  at  law  is  always  a  bar  to  the  aid  of 
equity  by  granting  either  of  the  remedies  under  considera- 
tion. Courts  of  equity  will  always  refuse  to  lend  their  aid. 
for  the  protection  of  rights,  or  for  the  prevention  of  wrongs, 
when  the  ordinary  legal  remedies  are  adequate  to  afford 
redress;  and  when  it  does  not  appear  that  the  remedy  at 
law  is  insufficient,  or  that  the  party  aggrieved  is  entitled  to 
more  speedy  relief  than  can  be  had  by  the  ordinary  and 
accustomed  modes  of  procedure  at  law,  an  injunction  will 
be  refused.2  Legal  rights  are  left  to  the  decision  of  a  legal 
forum,  and  in  the  absence  of  special  circumstances  war- 
ranting the  interposition  of  the  extraordinary  aid  of  courts 
of  equity  by  an  injunction,  such  courts  will  not  interfere 
for  the  protection  of  a  strictly  legal  right  which  may  be 
properly  tried  at  law.3  And  upon  similar  principles,  equity 
refuses  to  extend  the  aid  of  a  receiver  in  all  cases  where 
the  persons  aggrieved  may  obtain  ample  redress  in  the  usual 
course  of  proceedings  at  law,  or  where  courts  of  law  afford 

i  McCarthy  v.   Peake,    18    How.  v.  Clark,  4  Nev.,  188;   Mullen  v. 

Pr.,  138;  S.  C,  9  Ab.  Pr.,  164.  Jennings,   1  Stoekt.,   192;  Hart  v. 

2Coughron?;.  Swift,  18  111.,  414;  Marshall,   4   Minn.,   294;   Wooden 

Winkler  v.   Winkler,  40  111.,  179;  v.  Wooden,  2  Green  Ch.,  429. 
Poage  v.  Bell,  3  Rand.,  586;  Web-        3  Wooden  v.   Wooden,  2    Green 

ster  v.  Couch,  6  Rand.,  519;  Akrill  Ch.,  429. 
f.  Selden,  1  Barb.,  316;  Sherman 


620  KECEIVERS.  [CHAP.  XVII. 

a  safe  and  expedient  remedy  for  the  particular  grievance.1 
And  when  the  person  aggrieved  has  had  ample  opportunity 
of  asserting  his  rights  in  an  action  at  law,  but  has  negli- 
gently omitted  so  to  do,  he  is  barred  from  obtaining  relief 
in  equity  by  an  injunction.2  So,  too,  when  a  person  having 
an  adequate  remedy  at  law  for  the  redress  of  a  particular 
grievance,  loses  that  remedy  by  his  own  laches,  he  can  not 
come  into  a  court  of  equity  and  obtain  a  receiver  upon  the 
same  grounds  which  should  have  been  asserted  in  the  action 
at  law.3 

§  742.  It  is  also  to  be  noticed,  that  long  acquiescence  in  a 
particular  grievance,  without  effort  to  redress  it,  is  generally 
held  to  be  a  complete  bar  to  relief  in  equity,  either  by  a  re- 
ceiver or  an  injunction.  And  plaintiffs,  who  have  quietly 
acquiesced  in  defendants'  possession  of  property  for  a  long- 
period  of  years,  without  attempting  to  assert  their  rights  to 
the  property,  and  who  then  seek  to  change  such  possession 
by  a  receiver,  will  be  denied  the  aid  of  the  court  in  limine* 
And  when  the  application  for  a  receiver  is  based  upon  the 
alleged  misconduct  of  defendant,  but  it  is  shown  that  the 
state  of  affairs  complained  of  has  existed  for  many  years, 
with  full  knowledge  of  plaintiffs  and  without  their  objection, 
equity  will  refuse  to  lend  its  aid  by  a  receiver.5  The  same 
principle  prevails  in  administering  relief  by  interlocutory 
injunction,  and  the  courts  have  almost  uniformly  held  that 
long-continued  acquiescence  by  the  plaintiff  in  any  particular 
grievance  or  violation  of  his  rights,  which  he  afterward 
seeks  to  redress  by  the  preventive  aid  of  an  injunction, 
operates  as  a  bar  to  relief  in  equity,  and  courts  of  equity 
will  decline  to  interfere  in  behalf  of  persons  thus  negligent 
in  the  assertion  of  their  rights.6 


^ollory  v.  Leaver,  L.  R.,  9  Eq.,        3Drewry  v.  Barnes,  3  Russ.,  94. 
22;  Cremen  v.   Hawkes,    2  Jo.  &        4 Gray  v.  Chaplin,  2  Russ.,  126. 
Lat.,  674;  Parnily  v.  Tenth  Ward        5Skmners  Company  v.  Irish  So- 

Bank,  3  Edw.  Ch.,  395;  Corey  v.  ciety,  1  Myl.  &  Cr.,  162. 
Long,  43  How.  Pi\,  497;  S.  C,  12        «  Wood  r.  Sutcliffe,  2  Sim.,  N.  S.. 

Ab.  Pr.,  N.  S.,  427.  ■  163;    Payne    v.    Paddock,    Wall;. 

2  Tapp  v.  Rankin,  9  Leigh,  478.  (Mich.),  487 ;  Jacox  v.  Clark,  id. ,  249 ; 


CHAP.  XVII.]  INJUNCTIONS.  621 

§  743.     From  the  points  of  resemblance  already  indicated 
between  these  remedies,  and  from  the  application  of  certain 
fundamental  principles  of  equity  in  administering  both,  it  is 
not  to  be  inferred  that  the  appointment  of  a  receiver  neces- 
sarily follows  the  granting  of  an  injunction  in  all  cases,  or 
that  an  injunction  is  a  necessary  incident  to  a  receivership, 
or  that  the  two  remedies  are  always  inseparable.     And  while 
there  are  cases  where  an  injunction  follows  a  receivership 
almost  as  of  course,1  or  where  a  receiver  is  a  necessary  inci- 
dent to  an  injunction ; 2  and  while  it  frequently  happens  that 
the  courts  are  called  upon  to  administer  both  remedies  in 
one  and  the  same  action  and  at  one  and  the  same  time,  it 
by  no  means  follows  that  the  one  is  a  necessary  incident  of 
the  other,  and  the  two  are  to  be  regarded  as  separate  and 
independent  remedies.      In   other   words,  while   both  are 
branches  of   the   extraordinary  preventive  jurisdiction  of 
equity,  they  are  yet  distinct  and  separate  branches,  used  for 
the  attainment  of  different  results,  and  a  court  of  equity 
may  properly  refuse  a  receiver,  although  an  appropriate 
case  is  presented  for  an  injunction.3     So,  upon  the  other 
hand,  it  is  regarded  as  proper  to  appoint  a  receiver,  if  the 
facts  showing  the  necessity  for  the  relief  and  the  proper 
parties  are  before  the  court,  although  the  application  was 
made  for  an  injunction,  and  did  not  specify  the  appointment 
of  a  receiver.4     But  if  the  injunction  is  a  mere  adjunct  of 
the  receivership,  the  reversal  of  the  order  appointing  the 
receiver  will  also  operate  as  a  reversal  of  the  injunction/' 

§  744.  Neither  of  the  remedies  under  consideration  is  re- 
garded as  an  appropriate  means,  nor  is  a  court  of  equity  the 
proper  forum,  for  determining  disputes  or  controversies  con- 
cerning the  title  to  public  offices,  all  such  questions  properly 

Powell  v.  Allarton,  4  L.  J.  Ch.,  N.  3Rawnsley    V.    Trenton    Mutual 

S.,  91;    Maythorne  v.  Palmer,    11  Lif  e&  Fire  Insurance  Co.,  1  Stock  t.. 

Jur.,  N.  S.,  230.  347;  Oakley  v.  Paterson  Bank,  1 

!See  Seighortner  v.  Weissenborn,  Green  Ch.,  173. 

5  C.  E.  Green,  172.  "Whitney  v.  Buckrnan,  26  CaL, 

2  See    Penn   v.    Whiteheads,    12  447. 

Grat.,  74.  8  Merrell  v.  Pemberton,  62  Ga.,  29. 


622  EECEIVERS.  [CHAP.  XVII. 

pertaining  to  courts  of  law,  to  be  determined  by  proceedings 
in  quo  warranto,  or  other  appropriate  remedies  prescribed 
by  law  for  that  purpose.  And  while  there  are  cases  where 
both  receivers  and  injunctions  have  been  allowed  in  aid  of 
litigation  to  determine  the  right  to  the  fees  or  emoluments 
of  public  offices,  considered  merely  as  property  and  when 
only  contract  rights  have  been  involved,1  equity  will  refuse 
to  lend  its  extraordinary  aid,  either  by  an  injunction  or  by 
a  receiver,  for  determining  controversies  concerning  the  title 
to  public  offices,  and  will  leave  all  such  questions  to  the 
decision  of  courts  of  law,  to  which  forum  alone  they  prop- 
erly pertain.2 

.  §  745.  It  is  not  essential  to  the  exercise  of  either  branch 
of  the  extraordinary  jurisdiction  of  equity  under  consider- 
ation, that  the  property  constituting  the  subject-matter  of 
the  litigation  should  be  within  the  jurisdiction  of  the  court, 
provided  the  parties  are  within  its  control  and  amenable  to 
its  process.  And  there  are  frequent  cases  where  injunc- 
tions have  been  granted  against  parties  within  the  jurisdic- 
tion of  the  court,  although  the  subject-matter  in  controversy 
was  beyond  reach  of  its  process.3  So  there  are  frequent 
instances  where  equity  has  appointed  receivers,  although 
the  estate  or  property  which  it  was  sought  to  protect  was 
be}rond  the  jurisdiction  of  the  court,  being  situated  in  a 
foreign  country,  the  parties  in  interest,  however,  being 
within  its  control  and  subject  to  its  process.4  And  it  would 
seem  to  be  competent  for  a  court  of  equity,  in  one  country, 
to  grant  an  injunction  and  appoint  a  receiver  in  aid  of  the 

1  Palmer  v.  Vaughan,  3  Swans.,  Dehon  v.  Foster,  4  Allen,  545;  Vail 
173;  Cheek  v.  Tilley,  31  Ind.,  121.  v.  Knapp,  49  Barb.,  299;  Vermont 

2  Tappan  v.  Gray,  9  Paige,  507.  &  Canada  R.  Co.  v.  Vermont  Cen- 
And  see  People  v.  Draper,  24  Barb.,  tral  R.  Co.,  46  Vt.,  792. 

265 ;  Stone  v.  Wetmore,  42  Ga.,  601.  4  Davis  v.  Barrett,  13L  J.,N,  S. 

3Bunbury  v.  Bunbury,  1  Beav.,  Ch.,  304;  Langford  v.  Langford,  5 

320;   Beckford  v.  Kemble,  1  Sim.  L.  J.,  N.  S.  Ch.,  60;  Sheppard  v. 

&  Stu.,  7.     See,  also,  Cranstown  v.     Oxenford,  1  Kay  &  J.,  491 ;  v. 

Johnston,  3  Ves.,  182;  Portarling-  Lindsey,  15  Ves.,  91. 
ton  v.  Soulby,  3  Myl.  &  K,  104; 


CHAP.  XVII.]  INJUNCTIONS.  623 

enforcement  of  a  decree  rendered  in  a  foreign  country.1 
But  the  exercise  of  such  a  power  is  regarded  as  improper 
when  it  is  doubtful,  upon  the  record,  whether  plaintiffs  will 
be  ultimately  entitled  to  a  decree  in  the  second  action.2 

§  746.  The  existence  of  a  conflict  of  jurisdiction  between 
state  and  federal  courts  has  been  made  the  foundation  for 
relief  in  equity,  both  by  granting  an  injunction  and  by  ap- 
pointing a  receiver  over  the  property  in  controversy.  Thus, 
where  there  were  actions  pending  in  both  tribunals  between 
adverse  claimants  to  certain  property  of  a  perishable  nature, 
and  there  was  a  probability  of  a  bitter  and  long-continued 
litigation,  as  well  as  imminent  danger  of  collision  between 
the  executive  officers  of  the  two  courts  in  the  enforcement 
of  the  process  of  their  respective  courts,  the  case  was  re- 
garded as  an  appropriate  one  for  an  injunction  and  a 
receiver,  the  property  being  liable  to  become  entirely  value- 
less unless  taken  possession  of  and  sold.3 

§  747.  The  aid  of  an  injunction  is  sometimes  a  necessary 
adjunct  to  a  receivership  for  the  purpose  of  protecting  the 
receiver's  possession,  and  to  prevent  any  unauthorized  inter- 
ference, by  suit  or  otherwise,  with  the  property  or  fund  en- 
trusted to  his  care.  Indeed,  so  jealous  are  courts  of  equity 
of  any  unauthorized  interference  with  the  possession  of  their 
receivers,  that  they  usually  require  all  adverse  claimants  to 
come  in  and  assert  their  rights  in  the  action  in  which  the 
receiver  was  appointed.  And  when  parties  asserting  a  right 
to  property  which  is  subject  to  a  receivership  attempt  any 
unauthorized  interference  therewith,  or  institute  actions  for 
its  recovery  against  the  receiver,  without  first  obtaining 
leave  of  the  court  by  which  he  was  appointed,  that  court 
may  enjoin  them  from  proceeding,  and  thus  compel  them 
to  assert  their  rights  in  the  same  forum  in  which  the  re- 
ceiver was  appointed.4    And  this  may  be  done,  even  though 

JHoulditch  v.  Lord  Donegal,  8  3  Crane  v.  McCoy,  1  Bond  C.  C, 

Bligh  (N.  S.),  301.  422. 

2Houlditch    v.    Lord    Donegal,  4Tink  v.  Rundle,  10  Beav.,  318; 

Beat.,  146.  Attorney-General  v.  St.  Cross  Hos- 


C2-1 


RECEIVERS. 


[chap.  XVII. 


the  claimant  has  an  apparently  clear  right  to  the  property, 
since  he  can  not  be  permitted  to  disturb  the  receiver's  pos- 
session until  he  has  established  his  right  by  appropriate  pro- 
ceedings for  that  purpose.1  So  a  receiver's  possession  may 
be  protected  by  injunction,  although  the  party  enjoined  is 
proceeding  in  the  exercise  of  a  statutory  right,  as  in  the 
case  of  a  railway  company  attempting  to  condemn  land  in 
accordance  with  statute  for  the  use  of  its  road,  but  without 
obtaining  leave  of  the  court  by  which  a  receiver  had  been 
appointed  over  the  land.2  So  a  person  asserting  a  right  of 
common,  in  real  estate  in  a  receiver's  possession,  has  been 
enjoined  from  trespassing  upon  the  property  when  the 
alleged  right  of  common  had  been  abandoned  for  several 
years,  although  leave  was  given  to  be  examined  before  a 
master,  pro  interesse  suo,  as  to  the  right  claimed.3  So,  too, 
a  receiver  who  was  entitled  to  possession  of  and  to  collect 
wharfage  from  a  wharf  or  landing  upon  a  river,  connected 
with  the  property  entrusted  to  his  care,  has  been  allowed 
to  maintain  a  bill  for  an  injunction  against  the  authorities 
of  a  municipal  corporation,  who  were  interfering  with  his 
possession  and  attempting  to  collect  the  wharfage.4  And 
when  tenants  of  premises  subject  to  a  receivership  have, 
without  leave  of  court,  instituted  actions  of  trespass  or  of 
replevin  against  the  receiver,  who  has  distrained  for  rent 
due  from  such  tenants,  they  may  be  enjoined  from  pro- 
ceeding with  such  actions.5  It  is  held,  however,  that  an 
action  against  a  receiver  in  his  official  capacity  will  not  be 
enjoined,  on  the  receiver's  application,  upon  the  ground  that 
the  matters  in  controversy  have  been  determined  by  the 
court  in  other  proceedings,  since  this  would  be  a  complete 
defense  to  the  action  which  the  receiver  seeks  to  enjoin,  and 
he  should  avail  himself  of  it  in  that  action.6 


pital,  18  Beav.,  601;  Jolmes  v. 
Claugliton,  Jac,  573;  Evelyn  v. 
Lewis,  3  Hare,  472. 

1  Evelyn  v.  Lewis,  3  Hare,  472. 

'-"rink  v.  Rundle,  10  Beav.,  318. 

3  Jolmes  v.  Claugliton,  Jac.,  573. 


i  Grant  v.  City  of  Davenport,  18 
Iowa,  179. 

5  In  re  Persse,  8  Ir.  E^.,  Ill ;  Parr 
v.  Bell,  9  Ir.  Eq.,  55. 

6  Jay's  Case,  6  Ab.  Pr.,  293. 


CHAP.  XVII.]  INJUNCTIONS.  G25 

§  748.  It  has  been  shown  in  the  preceding  section,  thai 
courts  of  equity  frequently  interfere  by  injunction  to  pre- 
vent the  prosecution  of  unauthorized  suits  against  their  re- 
ceivers, such  relief  being  necessary  for  the  protection  of  the 
receiver's  possession,  which  is,  in  fact,  the  possession  of  the 
court  itself.  It  is  also  to  be  observed,  that  the  receiver 
himself  may  be  enjoined  from  prosecuting  unauthorized 
suits  against  third  persons,  under*  pretense  of  authority  de- 
rived from  the  court.  And  when  a  receiver  brings  an  action 
in  the  name  of  a  third  person,  without  his  authority  and 
without  the  sanction  of  the  court,  the  parties  to  such  suit 
are  entitled  to  the  aid  of  the  court  by  an  injunction  to  re- 
strain such  unauthorized  proceedings.1  If,  however,  the 
receiver  has  been  duly  authorized  by  the  court  to  bring  a 
particular  action,  it  will  not  permit  him  to  be  enjoined  from 
proceeding,  the  proper  course  for  persons  who  may  be  dis- 
satisfied being  to  apply  to  the  court  appointing  him  for 
relief,  instead  of  seeking  to  enjoin  him  in  another  suit.2 

1  In  re  Merritt,  5  Paige,  125.  -  Winfield  v.  Bacon,  24  Barb.,  154. 

40 


626  RECEIVERS.  [CHAP.  XVII. 


II.  The  Remedies  as  Applied  to  Corporations. 

§  749.     Tendency  of  legislation :  receiver  over  corporation  does  not  nec- 
essarily follow  injunction. 

750.  Injunction  may  be  granted  as  an  adjunct  of  a  receivership. 

751.  Application!  of  the  remedies  to  proceedings  in  quo  warranto  in 

New  York. 

752.  Injunctions  in  actions  by  receivers  to  recover  unpaid  subscrip- 

tions and  illegal  dividends. 

753.  Injunctions  in  aid  of  receivers  over  railways;  mortgagees  of 

tolls  of  turnpike. 

754.  Receiver  over  railway  entitled  to  injunction  against  diversion  of 

earnings. 

§  749.  Questions  of  considerable  interest  have  sometimes 
arisen  as  to  the  extent  to  which  the  remedies  by  injunction 
and  receiver  may  be  applied,  in  connection  with  each  other, 
in  cases  affecting  civil  corporations  and  the  rights  of  share- 
holders and  creditors.  It  frequently  happens  that  the  ex- 
traordinary aid  of  equity  is  invoked  against  corporate 
bodies,  under  circumstances  such  as  to  warrant  an  injunc- 
tion against  the  corporation  or  its  officers,  while  the  court 
is  not  justified  in  extending  the  aid  of  a  receiver.  Indeed, 
the  general  jurisdiction  exercised  by  courts  of  equity  over 
corporations,  independent  of  statute,  does  not  extend  to  the 
power  of  dissolving  the  corporation  and  destroying  its 
franchise,  or  of  sequestrating  the  corporate  property  for 
the  benefit  of  creditors  and  shareholders.  The  tendency  of 
modern  legislation,  however,  has  been  toward  an  enlarge- 
ment of  the  powers  of  courts  of  equity  in  this  regard,  and 
in  many  of  the  states  the  power  of  appointing  receivers 
over  corporations  has  been  expressly  conferred  by  legisla- 
tive enactment.  But,  in  the  absence  of  statutory  authority, 
the  courts  frequently  decline  to  assume  control  by  a  receiver 
over  the  affairs  of  a  corporation,  upon  a  bill  by  a  share- 
holder alleging  fraud  and  mismanagement  on  the  part  of 
its  officers,  and  limit  the  relief  to  the  granting  of  an  in- 


CHAP.  XVII.]  INJUNCTIONS.  62  T 

junction.1  Even  though  the  jurisdiction  of  the  court,  as 
enlarged  by  statute,  extends  to  appointing  a  receiver  over  a 
corporation  in  a  proper  case,  it  by  no  means  follows,  because 
an  injunction  has  been  granted  against  the  corporation, 
that  a  receiver  should  be  allowed ;  since  the  circumstances 
of  the  case  may  be  such  as  to  justify  a  suspension  of  the 
business  of  the  corporation,  while  its  officers  are  not  in 
fault  and  are  the  most  proper  persons  to  wind  up  its  affairs. 
And  if  it  is  apparent  to  the  court  that  a  receiver  is  not  re- 
quired to  protect  the  interests  either  of  shareholders  or  of 
creditors,  and  that  a  stranger  to  the  corporate  business  and 
affairs  can  not  wind  them  up  as  satisfactorily  as  the  directors, 
a  receiver  will  not  be  appointed  and  the  management  will 
be  left  in  the  hands  of  the  directors.2 

§  750.  "While,  as  is  thus  seen,  courts  of  equity  are  gener- 
ally more  reluctant  to  interfere  with  the  management  of  a 
corporation  by  a  receiver  than  by  an  injunction,  yet  when 
a  receiver  has  been  appointed,  an  injunction  may  fol- 
low as  a  necessary  adjunct  to  the  relief  already  granted. 
And  upon  appointing  a  receiver  of  all  the  assets  and  effects 
of  a  corporation,  in  a  proceeding  to  sequestrate  its  property 
and  wind  up  its  affairs,  the  court  may,  in  connection  with 
such  receivership  and  as  a  part  of  its  order,  enjoin  the  offi- 
cers and  directors  from  disposing  of  or  incumbering  any  of 
the  property,  and  from  collecting  any  demands  due  to  the 
corporation,  such  an  injunction  being  treated  as  a  necessary 
adjunct  or  incident  of  the  receivership.3  Indeed,  the  ap- 
pointment of  a  receiver  over  a  corporation  is  frequently 
equivalent  to  a  suspension  of  its  corporate  functions,  and  to 
an  injunction  against  its  agents  and  officers,  restraining 

1  Waterbury  v.  Merchants  Union  Stockt. ,    347 ;    Oakley  v.   Paterson 

Express  Co.,  50  Barb.,  157;  Neall  Bank,  1  Green  Ch.,  173;  Nichols  v. 

v.  Hill,  16  Cal.,  145;  Hower.  Deuel,  Perry  Patent  Arm  Co.,  3  Stockt., 

43  Barb.,  504;  Belmont  v.  Erie  R.  126. 

Co.,  52  Barb.,  637.  3 Morgan  v.  New  York  &  Albany 

2Rawnsley    v.    Trenton    Mutual  R.  Co.,  10  Paige,  290. 
Life    and    Fire    Insurance    Co.,  1 


G28  EECEIVEES.  [CHAP.  XTII. 

them  from  intermeddling  with  the  property  or  with  its 
management.1 

§  751.  Under  the  code  of  procedure  in  New  York,  in  pro- 
ceedings by  the  attorney-general  of  the  state  in  the  nature 
of  a  quo  warranto,  having  for  their  object  the  dissolution 
of  a  corporation  and  the  forfeiture  of  its  franchises,  while 
the  court  may  properly  grant  an  injunction  to  restrain  the 
corporation  from  disposing  of  its  funds,  or  from  doing  any 
illegal  act,  it  will  not  appoint  a  receiver  before  judgment  of 
forfeiture.2 

§  752.  Under  the  statutes  of  some  of  the  states,  receiv- 
ers appointed  to  wind  up  the  affairs  of  insolvent  corpora- 
tions are  empowered  to  collect  from  delinquent  shareholders 
the  amounts  due  for  unpaid  subscriptions  to  capital  stock. 
When  a  receiver,  in  the  discharge  of  this  duty,  has  obtained 
a  decree  against  a  shareholder  for  the  payment  of  a  balance 
due  on  account  of  his  subscription,  such  shareholder  is  not 
entitled  to  an  injunction  against  the  receiver  to  restrain  him 
from  collecting  the  amount  until  all  the  debts  can  be  ascer- 
tained, and  the  amount  due  from  each  shareholder  be  deter- 
mined, since  such  objections  should  have  been  urged  in 
defense  of  the  action  brought  by  the  receiver,  and  will  not 
avail  after  a  decree  in  that  action.3  But  when  a  receiver 
of  a  corporation,  occupying  for  the  purposes  of  such  suit 
the  position  of  a  trustee  for  all  its  creditors,  institutes  an 
action  to  recover  back  from  the  shareholders  illegal  divi- 
dends, which  they  have  received  from  the  corporation  while 
it  was  in  a  state  of  insolvency,  such  shareholders  are  enti- 
tled to  the  protection  of  an  injunction  against  individual 
creditors  of  the  corporation,  to  restrain  them  from  prosecut- 
ing like  actions.4  So  a  receiver  of  a  corporation,  who  is 
invested  with  a  right  of  action  against  delinquent  share- 
holders for  the  recovery  of  their  unpaid  subscriptions  to 

i  Gravenstine's  Appeal,  49 Pa.  St.,  3  Pentz  v.  Hawley,  1  Barb.  Ch., 

310.  122. 

2 People  v.  Washington  Ice  Co.,  4  Osgood  v.  Laytin,  3  Keyes,  521, 

18  Ab.  Pr.,  382.  affirming  S.  C,  48  Barb..  464 


CHAP.  XVII.]  INJUNCTIONS.  629 

the  capital  stock,  may  enjoin  the  creditors  of  the  company 
from  proceeding  with  separate  actions  of  the  same  nature 
for  satisfaction  of  their  individual  demands.1  And  when 
the  receiver  of  an  insolvent  bank  is  proceeding  in  equity 
concurrently  and  in  the  same  action  with  some  of  its  cred- 
itors to  enforce  an  additional  liability  of  the  stockholders 
under  the  charter  for  the  benefit  of  all  creditors  entitled 
thereto,  the  court  may  enjoin  individual  creditors  from  pur- 
suing separate  actions  at  law  to  enforce  such  liability  for 
their  own  benefit.2 

§  753.  The  aid  of  an  injunction  is  sometimes  necessary 
in  behalf  of  a  receiver,  as  an  adjunct  to  the  original  action 
in  which  he  was  appointed,  and  for  the  purpose  of  more 
effectually  preserving  the  subject-matter  over  which  his 
appointment  extends.  For  example,  when  a  receiver  is  ap- 
pointed over  a  railway  company,  and  is  empowered  by 
the  order  of  court  to  secure  and  protect  the  assets,  fran- 
chises and  rights  of  the  company,  and  a  land  grant  to  which 
it  is  entitled  from  the  state,  he  may  maintain  a  bill  in  equity 
to  enjoin  the  state  officers  from  granting  the  same  Jands  to 
other  persons.  Such  an  action  is  regarded  as  an  adjunct  of 
the  original  suit,  and  is  analogous  to  a  petition  by  the  re- 
ceiver to  the  court,  asking  that  it  protect  his  possession  and 
the  property  under  his  control.3  So  when  a  receiver  is  ap- 
pointed over  a  railway  company  in  behalf  of  its  mortgage 
bondholders,  in  proceedings  for  foreclosure  when  the  security 
is  inadequate  to  the  payment  of  the  mortgage  indebtedness 
and  the  corporation  is  shown  to  be  insolvent,  it  is  proper  to 
accompany  the  receivership  with  an  injunction  against  the 
railway  company  and  its  agents,  to  prevent  any  interfer- 
ence with  the  receiver,  or  with  the  property  entrusted  to 
him.4    And  as  between  different  mortgagees  of  the  tolls  of 

i  Calkins  v.   Atkinson,  2  Lans.,  4  Ruggles  v.  Southern  Minnesota 

12 ;  Rankine  v.  Elliott,  16 N.  Y.,  377.  Railroad,  U.  S.  Circuit  Court,  Dis- 

2Eames  v.  Doris,  102  111.,  350.  trict  of  Minnesota,  5  Chicago  Legal 

» Davis  v.   Gray,    16  Wal.,   203,  News,  110. 
affirming  S.  C,  1  Woods,  420. 


630  RECEIVERS.  [CHAP.  XVII. 

a  turnpike  company,  all  of  whom  are  entitled  to  payment 
out  of  the  tolls  pari  passu,  and  without  priority,  a  mort- 
gagee who  receives  the  entire  tolls,  and  applies  them  in  dis- 
charge of  his  own  demand,  may  be  enjoined  and  a  receiver 
of  the  tolls  may  be  appointed  on  the  application  of  another 
mortgagee.1 

§  754.  A  receiver  of  a  railway  company,  who  is  directed 
to  operate  and  manage  the  road  subject  to  the  orders  and 
direction  of  the  court,  is  entitled  to  an  injunction  to  prevent 
an  improper  diversion  of  the  earnings  or  an  attempt  to  di- 
vest the  receiver's  control  over  them,  since  his  successful 
management  of  the  road  depends  upon  his  control  over  its 
income  and  earnings.  And  the  injunction  may  be  granted, 
although  the  attempt  to  divert  the  earnings  is  made  by  suit 
in  another  state,  the  parties,  however,  being  within  the 
jurisdiction  of  the  court  by  which  the  receiver  was  ap- 
pointed, and  whose  aid  he  seeks  by  injunction.  The  court, 
under  such  circumstances,  does  not  attempt  by  its  injunction 
to  operate  upon  the  court  in  the  other  state,  but  only  acts 
in  personam  upon  the  parties  within  its  own  jurisdiction, 
in  accordance  with  well-established  principles  of  equity,  and 
restrains  them  from  interfering  with  or  diverting  the  earn- 
ings to  which  the  receiver  is  entitled.2 

i  Dumville  1?.  Ashbrooke,  3  Russ. ,  2  Vermont  &  Canada  R.  Co.  v, 
99,  note  c.  Vermont  Central  R.  Co. ,  46  Vt .  792. 


CIIAJ\  XVII.]  INJUNCTIONS.  631 


III.  Creditors'  Suits. 

§  755.     Creditors  without  judgment  not  entitled  either  to  injunction  or 
receiver. 

756.  Exception  to  the  rule  in  partnership  cases. 

757.  Lien  upon  vessel;  action  by  creditors  of  married  woman  to 

charge  her  individual  property. 

758.  Judgment  creditors  entitled  to  both  remedies ;  former  practice 

under  New  York  chancery  system. 

759.  When  receiver  denied  injunction  and  receiver  in  action  to  set 

aside  assignment  by  debtor. 

§  755.  Courts  of  equity  are  frequently  called  upon  to 
interfere,  both  by  a  receiver  and  an  injunction,  for  the  pro- 
tection of  judgment  creditors  seeking  the  enforcement  of 
their  judgments  out  of  the  property  and  equitable  assets  of 
the  debtor.  Neither  remedy,  however,  will  be  administered 
in  behalf  of  mere  general  creditors,  without  lien  upon  the 
debtor's  property,  and  whose  rights  have  not  been  judicially 
established  by  a  judgment.  Any  interference  with  the 
property  of  the  citizen,  or  with  his  right  to  manage  and  dis- 
pose of  it,  before  judgment  recovered  against  him,  is  beyond 
the  judicial  power,  and  courts  of  equity  will  not  enlarge  or 
extend  their  extraordinary  jurisdiction  beyond  the  well- 
defined  limits  fixed  by  law.  And  whatever  hardships  or  em- 
barrassments may  result  to  creditors  from  the  enforcement 
of  the  doctrine,  by  reason  of  the  slow  procedure  in  courts  of 
law  or  otherwise,  are  regarded  as  evils  which  should  prop- 
erly be  redressed  by  legislative  rather  than  by  judicial  au- 
thority.1 And  the  rule  is  applied  even  where  the  bill 
alleges  gross  fraud  upon  the  part  of  the  debtor,  and  that  he 

HJhl    v.    Dillon,    10    Md.,    500;  Stockt.,  465;  Phelps  v.  Foster,  18 

Blondheim  v.  Moore,  11  Md.,  365;  111.,   309;  Bigelow  v.   Andress,   31 

Nusbaum  v.    Stein,    12  Md.,    315;  111.,  322.     See,  contra,  Haggarty  v. 

Hubbard  i>.  Hubbard,  14  Md.,  356;  Pittman,    1   Paige,   298;  Cohen  v. 

Bayaudv.  Fellows,  28  Barb.,  451;  Meyers,   42  Ga.,  46;  Thompsen  v. 

Wiggins  v.  Armstrong,   2  Johns.  Diffenderfer,  1  Md.  Ch.,  489;  Ros- 

Ch.,    144;  Holdrege  v.  Gwynne,  3  enberg  v.  Moore,  11  Md.,  376. 
C.  E.  Green,  26 ;  Young  v.  Frier,  1 


033 


RECEIVERS. 


[_CHAT.  XVII. 


has  transferred  his  effects  to  defraud  his  creditors,  and  that 
plaintiff  has  brought  suit  upon  liis  demand,  but  can  not 
obtain  judgment  and  execution  before  defendant's  assets  are 
wasted.1 

§  756.  Under  the  New  York  code  of  procedure,  however, 
a  departure  from  the  rule  is  allowed  in  proceedings  for  the 
enforcement  of  demands  due  from  partnership  debtors. 
And  it  is  held,  in  such  cases,  when  the  insolvency  of  the  firm 
and  of  its  individual  members  is  conceded,  and  the  indebted- 
ness is  admitted  to  be  justly  due,  that  a  creditor  of  the  firm, 
even  before  judgment,  may  have  an  injunction  and  a  re- 
ceiver, as  against  the  partners  and  third  persons  to  whom 
they  have  attempted  to  assign  their  property  for  the  pur- 
pose of  hindering  their  creditors.  In  such  cases,  there  being 
no  advantage  to  be  derived  from  a  preliminary  judgment 
and  execution,  the  courts  extend  all  the  relief  sought  in  one 
and  the  same  action,  without  compelling  the  creditor  to 
submit  to  the  delay  of  obtaining  judgment  by  a  separate 
suit.2 

§  757.  So  a  creditor  may  have  such  a  special  or  equitable 
lien  upon  the  debtor's  property  as  to  entitle  him  both  to  a 
receiver  and  an  injunction,  although  his  demand  is  not  yet 
reduced  to  judgment.  Thus,  persons  advancing  money  for 
supplies  and  repairs  of  a  vessel,  and  receiving  from  the  mas- 
ter an  assignment  of  all  the  earnings  of  the  vessel  upon  her 
v<  >vage,  and  of  all  lien  or  interest  which  he  as  master  has 
therein,  are  entitled  to  an  injunction  against  any  interfer- 
ence with  the  collection  of  the  earnings,  as  well  as  a  receiver 
to  collect  them,  upon  showing  the  insolvency  of  the  owners 
and  that  such  relief  is  necessary  to  protect  their  lien.3  So 
in  an  equitable  action  by  creditors  of  a  married  woman  who 
is  doing  business  as  a  trader,  the  creditors  seeking  to  charge 
her  individual  property  with  the  payment  of  her  debts,  it 


i  Rich  v.  Levy,  16  Md.,  74. 

2  Mott  v.  Dunn,  10  How.  Pr.,  225. 
And  see  Levy  v.  Ely,  15  How.  Pr., 
395 ;  La  Cliaise  v.  Lord,  10  How.  Pr., 


461 ;  Jackson  v.  Sheldon,  9  Ab.  Pr., 
127. 

aSorley  v.  Brewer,  18  How.  Pr., 
276. 


CHAP.  XVII.]  INJUNCTIONS.  633 

has  been  held  proper  to  appoint  a  receiver  and  grant  an 
injunction,  when  it  is  apparent  that  there  is  danger  of  the 
assets  being  wasted  or  placed  beyond  reach  of  the  creditors, 
the  relief,  in  such  a  case,  being  based  upon  the  same  grounds 
as  in  ordinary  cases  of  creditors'  bills  for  the  enforcement 
of  judgments.1 

§  758.  After  creditors  have  established  their  demands 
against  a  debtor  by  judgment,  and  have  thus  acquired  a  hen 
upon  his  property,  they  may  properly  invoke  the  aid  of 
equity  both  by  a  receiver  and  an  injunction,  as  a  necessary 
means  of  enforcing  payment  of  their  judgments,  and  pre- 
venting the  debtor  from  wasting  or  disposing  of  his  assets 
until  their  judgments  are  satisfied.  For  example,  creditors 
who  have  obtained  judgment  and  levied  upon  a  stock  of 
goods  in  their  debtor's  possession  may  have  an  injunction 
and  a  receiver,  as  against  the  debtor  and  a  third  person 
claiming  the  goods  as  mortgagee,  upon  a  bill  alleging  that 
the  goods  are  more  than  sufficient  to  pay  the  mortgage  in- 
debtedness ;  that  a  portion  of  the  stock  is  not  covered  by 
the  mortgage ;  that  the  debtor  has  no  other  property  out  of 
which  to  satisfy  the  judgment,  and  that  the  mortgagee  has 
permitted  the  debtor  to  use  and  dispose  of  the  goods  covered 
by  the  mortgage.2  And  under  the  former  chancery  practice 
in  New  York,  receivers  and  injunctions  were  allowed  almost 
as  of  course  upon  creditors'  bills,  after  return  of  execution 
against  the  debtor  nulla  hona.  And  it  was  held  to  be  the 
duty  of  the  judgment  creditor,  after  filing  his  bill  and  ob- 
taining an  injunction  to  restrain  the  debtor  from  interfering 
with  his  assets,  to  apply  to  the  court  within  a  reasonable 
time  for  a  receiver  over  the  assets,  to  prevent  them  from 
being  wasted  or  destroyed,  and  to  secure  the  collection  of 
debts  due  the  defendant.3  In  such  cases,  the  courts  proceed 
upon  the  theory  that  the  defendant  debtor,  after  being  en- 
joined from  interfering  with  or  disposing  of  his  property, 

iToddv.  Lee,  15  Wis.,  365.  horn,   Clarke  Ch.,   214;  Osborn  v. 

2  Rose  u.  Bevan,  10  Md.,  466.  Heyer,    2    Paige,    342.      And    see 

3  Bank  of  Monroe  v.   Schermer-    Bloodgood  v.  Clark,  4  Paige,  574. 


634  RECEIVERS.  [CHAP.  XVII. 

can  have  no  honest  motive  in  resisting  the  appointment  of 
a  receiver ;  and  that  if  he  has  property  it  is  for  his  own  in- 
terest that  it  should  be  preserved  pendente  lite,  while  if  he 
has  none,  no  harm  can  result  from  the  appointment,  and 
plaintiff  proceeds  at  the  risk  of  his  costs.1 

§  759.  When  a  receiver  in  a  creditor's  suit  institutes  an 
action  to  recover  property  transferred  by  the  debtor,  under 
a  voluntary  assignment  for  the  benefit  of  his  creditors,  he 
is  not  entitled  to  an  injunction  and  a  receiver  as  to  the  prop- 
erty assigned,  if  he  fails  to  show  that  the  transfer  was  made 
to  hinder  or  defraud  creditors.2 

1  Fitzburgh  v.  Everingharu,  6  2  Bostwick  v.  Elton,  25  How.  Pr., 
Paige,  29.  362. 


CHAP.  XVII.]  INJUNCTIONS. 


635 


g 

760. 

761. 

762. 

763. 

764. 

765. 

766. 

IV.  Partnerships. 

The  remedies  dependent  upon  the  same  conditions ;  case  as  pre- 
sented must  warrant  a  dissolution. 

Actual  partnership  must  be  shown ;  when  defendant  allowed  to 
give  security  in  lieu  of  injunction  and  receiver. 

Grounds  for  injunction  and  receiver  in  partnership  cases;  want 
of  confidence ;  irreconcilable  disagreement ;  defendant's  insolv- 
ency and  fraud. 

Injunction  and  receiver  do  not  necessarily  follow  dissolution; 
defendant's  insolvency  after  dissolution. 

Violation  of  articles  ground  for  relief ;  lumber  business ;  courts 
averse  to  appointing  receiver  ex  parte. 

Partnership  in  farm ;  mining  business  in  foreign  country. 

Receiver  does  not  necessarily  follow  injunction;  when  injunc- 
tion dependent  on  fate  of  receivership. 

767.  Denial  by  answer  a  bar  to  relief. 

768.  Assignment  by  insolvent  partners  after  dissolution  ground  for 

relief. 

769.  Receiver  and  injunction  on  death  of  partner. 

770.  Receiver  allowed  when  defendants  enjoined    from  collecting 

debts ;  receiver  not  enjoined  from  managing  fund. 

771.  Sale  of  good-will  by  receiver  and  injunction  against  continuing 

business  in  same  locality. 

§  760.  In  actions  for  the  dissolution  of  partnerships  and 
for  an  accounting  between  partners,  courts  of  equity  are 
frequently  called  upon  to  administer  relief  both  by  granting 
an  injunction  and  appointing  a  receiver,  in  one  and  the 
same  action.  Substantially  the  same  conditions  are  neces- 
sary, in  this  class  of  cases,  to  justify  the  interposition  of  a 
receiver,  as  are  requisite  to  warrant  an  injunction.  The 
relief  will  not  be  granted  merely  because  of  a  quarrel  be- 
tween partners,  but  there, must  be  some  actual  abuse  of 
partnership  property,  or  of  the  rights  of  a  member  of  the 
firm,  and  a  mere  temptation  to  such  abuse  will  not  suffice. 
And  to  warrant  a  court  in  granting  either  of  these  remedies, 
the  case  as  presented  must  appear  to  be  such  as  to  justify  a 
decree  for  a  dissolution  of  the  firm,  since,  in  interposing  its 
extraordinary  aid,  equity  generally  looks  to  the  winding  up 


G36  RECEIVERS.  [CHAP.  XVII. 

of  the  business,  and  not  to  its  continuation  or  management 
by  the  court.  If,  therefore,  a  dissolution  has  actually  taken 
place,  or  if  it  is  apparent  that  it  will  be  decreed  because  of 
a  breach  of  contract  or  of  duty  by  one  partner,  equity  may 
properly  interfere.1  And  when,  upon  the  dissolution  of  a 
partnership,  the  parties  are  unable  to  agree  upon  the  adjust- 
ment of  its  affairs,  the  courts  will  usually  appoint  a  receiver, 
with  a  view  to  protecting  the  rights  of  all  parties  in  inter- 
est, and  will  grant  an  injunction  as  a  necessary  adjunct  of 
the  receivership.2  But  when  the  allegations  of  the  bill  on 
which  a  preliminary  injunction  has  been  granted  are  fully 
and  positively  denied  by  the  answer  of  the  defendant  part- 
ner, the  injunction  will  be  dissolved  and  a  motion  for  a 
receiver  will  be  denied.3 

§  761.  It  is  also  to  be  borne  in  mind,  that  it  is  indispen- 
sable to  the  granting  either  of  an  injunction  or  of  a  receiver 
in  partnership  cases,  that  there  should  actually  be  an  exist- 
ing partnership  between  the  parties,  since,  otherwise,  the 
individual  property  of  a  defendant  might  be  interfered  with, 
and  it  might  appear  in  the  end  that  plaintiff  had  no  right. 
"Where,  therefore,  the  partnership  is  merely  nominal,  the 
parties  acting  under  an  agreement  that  one  shall  be  em- 
ployed by  the  other,  his  compensation  to  be  paid  by  a  share 
of  profits  either  with  or  without  additional  salary,  the  con- 
tract expressly  stating  that  they  are  not  partners,  although 
using  a  firm  name,  the  person  thus  employed  has  no  such 
lien  upon  the  assets  as  to  warrant  a  court  of  equity  in  enter- 
taining a  bill  in  his  behalf  for  an  injunction  and  a  receiver,4 
even  though  the  conduct  of  the  parties  has  been  such  as  to 
render  them  liable  as  partners  to  third  persons,  the  rights 
of  third  persons  or  of  creditor^  not  being  involved  in  the 
litigation.5     And  when  the  plaintiff  partner,  in  an  action 

iHenn  v.  Walsh,  2  Edw.  Ch.,  3  Rhodes  v.  Lee,  32Ga.,470;  Henn 
129.  v.  Walsh,  2  Edw.  Ch.,  129. 

2  Van  Rensselaer  v.  Emery,  9  4  Kerr  v.  Potter,  6  Gill,  404 ;  Nut- 
How.  Pr.  135.  ting  v.  Colt,  3  Halst.  Ch.,  539. 

s  Kerr  v.  Potter,  6  GUI,  604. 


CHAT.  XVII.]  INJUNCTIONS.  637 

for  the  dissolution  of  a  firm,  has  obtained  a  receiver  and  an 
injunction,  but  defendants  deny  the  existence  of  a  partner- 
ship, and  it  is  apparent  to  the  court  that  plaintiff's  interest 
in  the  firm,  if  any,  is  very  small,  and  that  the  business  will 
be  greatly  endangered,  if  not  ruined,  by  continuing  the  re- 
ceiver, it  is  proper  to  permit  defendants,  in  lieu  of  the 
injunction  and  receiver,  to  give  plaintiff  security  for  any 
sum  to  which  he  may  ultimately  be  found  entitled.1 

§  762.  It  has  already  been  shown  that  equity  will  not 
extend  the  aid  of  an  injunction  and  a  receiver  in  partnership 
cases  because  of  a  mere  quarrel  between  the  partners,  but 
that  some  actual  abuse  or  injury  must  be  shown.2  But  the 
fact  that  a  partner's  conduct  has  been  such  as  to  destroy 
that  feeling  of  mutual  confidence  which  should  exist  be- 
tween copartners  may  properly  be  taken  into  consideration 
by  the  court,  and  is  an  important  element  in  determining 
whether  plaintiff  is  entitled  to  an  injunction  and  a  receiver.3 
And  when,  by  reason  of  the  improper  conduct  of  one  of 
two  partners,  such  a  want  of  confidence  exists  between  them 
as  to  justify  the  court  in  dissolving  the  firm,  a  receiver  may 
be  appointed  and  an  injunction  granted,  the  injunction 
following  the  receiver  almost  as  of  course,  under  such  cir- 
cumstances.4 And  when  the  case,  as  presented  upon  the 
pleadings,  discloses  a  serious  and  apparently  irreconcilable 
disagreement  between  the  partners  as  regards  the  control 
and  disposition  of  their  assets, and  their  respective  claims 
against  each  other,  a  court  of  equity  may  properly  grant 
an  injunction  and  a  receiver,  the  relief,  in  such  a  case,  being 
regarded  as  a  provident  exercise  of  the  extraordinary  juris- 
diction of  equity.5  So  when  plaintiff  shows  that  the  de- 
fendant partner  is  insolvent  and  has  disposed  of  part  of  the 

1  Popper  v.  Scheider,  7  Ab.  Pr.,  1  Bland,  418;  Boyce  v.  Burchard, 
N.  S.,  56.  21  Ga.,  74. 

2  See  §  760,  ante.  *  Sieghortner  v.  Weissenborn,  5 

3  Smith  v.   Jeyes,  4  Beav.,  503.  C.  E.  Green,  172. 

See,  also,  Sutro  v.  Wagner,  8  C.  E.  s  Whitman  v.  Robinson,  21  Md., 
Green,  388 ;  Williamson  r.  Wilson,     30. 


63S 


RECEIVERS. 


[CHAP.  XVII. 


property  with  intent  to  defraud  creditors,  an  injunction  and 
a  receiver  may  be  allowed,  although  there  is  a  dispute  as  to 
whether  property  in  defendant's  possession  is  firm  propeity, 
if  it  appears  that  it  was  received  as  part  payment  upon  a 
sale  of  property  belonging  to  the  firm.1  So,  too,  a  failure 
by  one  partner  to  contribute  his  portion  of  the  capital  stock 
as  agreed  upon  b}T  the  partnership  articles,  coupled  with  his 
insolvency  and  refusal  to  pay  any  portion  of  the  firm  debts, 
and  the  sale  of  his  interest  to  a  third  person  without  the 
knowledge  or  consent  of  his  partner,  afford  sufficient  grounds 
for  an  injunction  and  a  receiver,  when  such  purchaser  has 
taken  possession  of  the  firm  property  and  threatens  to  ex- 
clude the  other  partner  therefrom.2 

§  763.  As  has  already  been  shown,  equity  will  seldom 
lend  its  aid  by  a  receiver  and  an  injunction  in  partnership 
matters,  unless  such  a  case  is  presented  as  to  justify  a  disso- 
lution of  the  firm.  But  it  is  not  to  be  inferred  from  this 
general  doctrine,  that,  because  a  firm  has  been  dissolved 
and  plaintiff  is  entitled  to  an  accounting,  he  is  necessarily 
entitled  to  an  injunction  and  a  receiver;  and  there  must,  in 
all  cases,  be  some  actual  abuse  of  partnership  rights,  or  of 
partnership  property,  to  warrant  a  court  of  equity  in  inter- 
fering.3 Where,  however,  in  an  action  between  partners  for 
a  settlement  of  their  firm  affairs  after  dissolution,  defendant 
is  shown  to  be  insolvent,  the  court  may  properly  grant  an 
injunction  and  a  receiver  for  the  protection  of  plaintiff's 
rights,  the  insecurity  of  the  partnership  assets,  if  left  to 
the  control  of  an  insolvent  defendant,  affording  strong 
ground  for  relief  in  equity.4 

§  764.  Violations  of  the  copartnership  articles  are  some- 
times made  the  foundation  for  an  injunction  and  a  receiver 
in  controversies  between  partners.  Thus,  when  a  partner- 
ship is  formed  for  the  purpose  of  sawing  lumber,  and  by 
the  articles  of  agreement  the  partner  entrusted  with  the 

Baylor  v.  Mockbie,  9  Iowa,  209.        3  Rent  on  v.  Chaplain,  IStockt.,  62. 
2Heathcot     v.     Ravenscroft,     2        4  Randall    v.    Morrell,    2    C.    E. 
Halst.  Ch.,  113.  Green,  343. 


CHAP.  XVII.]  INJUNCTIONS.  639 

management  of  the  business  is  to  take  the  necessary  timber 
for  use  in  the  business  from  land  belonging  to  his  copartner, 
a  violation  of  this  part  of  the  contract  has  been  held  to 
constitute  sufficient  ground  for  a  receiver  and  an  injunction, 
the  firm  being  shown  to  be  in  a  declining  condition  and 
its  indebtedness  increasing.1  But  when  an  injunction  has 
already  been  granted  in  a  controversy  between  partners, 
which  affords  ample  protection  from  loss  until  a  motion  for 
a  receiver  can  be  regularly  heard,  the  court  will  decline  to 
appoint  a  receiver  without  notice  to  defendant  and  before 
service  of  process.2 

§  765.  Where  plaintiffs,  who  were  the  owners  of  a  farm, 
had  entered  into  an  agreement  with  defendant  in  the  nature 
of  a  partnership  for  working  the  farm  and  for  a  division  of 
the  profits,  plaintiffs  reserving  the  right  to  terminate  the 
partnership  on  six  months  notice  if  the  profits  should  not 
reach  a  specified  amount,  they  were  allowed  an  injunction 
and  a  receiver,  upon  showing  that  the  profits  had  not 
'  reached  the  prescribed  amount.3  And  when  an  association 
in  the  nature  of  a  partnership  was  organized  in  England,  to 
conduct  the  business  of  mining  in  a  foreign  country,  and 
the  property  of  the  association  in  the  foreign  country  was 
vested  in  a  trustee  for  management,  a  member  of  the  asso- 
ciation in  England,  upon  a  bill  in  behalf  of  himself  and  all 
others  for  an  accounting  and  a  distribution  of  the  profits, 
was  allowed  a  receiver  and  an  injunction  to  restrain  the 
trustee  from  selling,  the  trustee  having  absconded  and  hav- 
ing threatened  to  sell  the  property.4 

§  766.  Although  a  preliminary  injunction  is  granted  upon 
an  ex  parte  application,  on  a  bill  by  one  partner  seeking  a 
dissolution  of  the  linn,  it  does  not  necessarily  follow  that  a 
receiver  must  be  appointed.  And  if  the  court  is  satisfied, 
upon  the  case  as  presented,  that  plaintiff  is  not  entitled  to  a 
dissolution,  it  will  refuse  to  appoint  a  receiver  and  will  leave 

1  New  v.  Wright,  44  Miss.,  202.  3  Dunn  v.  McNaught,  38  Ga.,  179. 

2  McCarthy  v.  Peake,  18  How.  •>  Sheppard  V.  Oxenford,  1  Kay  & 
Pr.,  138.  J.,  491. 


640 


KECEIVEKS. 


[CHAP.  XVII. 


the  injunction  to  be  dissolved  upon  motion  for  that  purpose.1 
But  the  continuance  of  an  injunction  which  has  been  granted 
to  preserve  partnership  property  from  waste  pending  an 
application  for  the  appointment  of  a  receiver,  is  dependent 
upon  the  fate  of  such  application,  and  if  the  receiver  is 
denied  the  injunction  must  be  dissolved.2  If,  however,  the 
court  has  appointed  a  receiver,  and  has  also  allowed  an  in- 
junction as  a  necessary  adjunct  to  the  receivership,  under 
the  circumstances  of  the  case,  upon  overruling  a  motion  to 
rescind  the  appointment  of  the  receiver  it  will  continue  the 
injunction  until  the  hearing,  or  until  the  further  order  of 
the  court.3 

§  767.  A  full  denial  by  defendant's  answer  of  all  the 
equities  of  plaintiff's  bill  will  usually  operate  as  a  bar  to 
relief  by  an  injunction  and  a  receiver,  in  partnership  as  in 
other  cases.  And  when  the  plaintiff  partner  seeks  a  disso- 
lution, upon  the  ground  that  defendant  has  drawn  from  the 
business  more  than  the  sum  to  which  he  was  entitled  under 
the  partnership  articles,  but  the  answer  denies  this  and 
denies  all  the  allegations  of  the  bill,  the  court  will  not  grant 
either  an  injunction  or  a  receiver.4 

§  768.  When  a  partnership  is  dissolvable  at  the  will  of 
either  partner,  and  does,  in  fact,  become  dissolved  by  the 
insolvency  of  some  members  of  the  firm,  an  assignment  of 
the  firm  assets  by  the  insolvent  members  for  the  payment 
of  their  private  debts,  is  sufficient  ground  for  a  receiver  and 
an  injunction,  which  should  extend  to  all  the  firm  assets  in 
the  hands  of  the  defendants  and  of  their  assignee.5 

§  769.  In  case  of  the  death  of  one  partner,  there  being 
no  partnership  articles,  and  no  provision  for  continuing  the 
business  by  the  representatives  of  the  deceased  partner,  if 
the  survivor  refuses  to  close  up  the  business  within  a  rea- 


iGarretson  v.  Weaver,   3  Edw.  4Henn  v.  "Walsh,   2  Edw.   Ch., 

Ch.,  385.  129. 

2  Walker  v.  House,  4  Md.  Ch.,  39.  5 Davis  v.  Grove,  2  Rob.  (N.  Y.), 

s  Williamson  v.  Wilson,  1  Bland,  134;  Same  v.  Same,  id.,  635. 

428. 


CHAP.  XVII.]  INJUNCTIONS.  Gil 

sonablo  time,  but  continues  to  manage  it  for  liis  own  benefit 
and  in  his  own  name,  the  court  will  enjoin  him  from  con- 
tinuing and  will  appoint  a  receiver,  upon  a  bill  by  the  ad- 
ministrator of  the  deceased  partner,  equity,  under  such 
circumstances,  regarding  the  survivor  as  a  trustee  for  the 
creditors  and  representatives  of  the  deceased.1  And  upon 
appointing  a  receiver,  upon  a  bill  by  the  administrator  of  a 
deceased  partner  against  the  survivors,  the  court  will  re- 
quire them  to  deliver  to  the  receiver  all  unexpended  money 
in  their  hands,  with  all  personal  property,  evidences  of  debt, 
and  choses  in  action,  and  will  enjoin  them  from  collecting 
any  debts  due  to  the  firm.2 

§  770.  Upon  a  bill  by  a  partner  for  a  dissolution  of  the 
firm,  when  the  defendant  partners  have  been  enjoined  from 
collecting  debts,  the  court  should  appoint  a  receiver  to  col- 
lect the  debts.3  And  when  a  receiver  is  appointed  over 
partnership  effects,  in  proceedings  under  judgments  against 
the  firm,  it  is  improper  to  enjoin  him  from  the  management 
of  the  fund  or  property,  since  this  would  be  equivalent  to 
enjoining  the  court  itself  from  disposing  of  the  funds  which 
may  come  into  the  hands  of  its  officer,  the  receiver.4 

§  771.  When  the  business  of  a  partnership  is  of  such  a 
nature  that  it  is  impossible  for  a  receiver  to  conduct  it,  and 
the  court,  therefore,  directs  a  sale  of  the  lease  and  good-will 
of  the  firm,  it  is  proper,  for  the  purpose  of  giving  efficacy 
to  the  sale  of  the  good-will,  to  permit  either  party  to  pur- 
chase, and  to  enjoin  the  others  from  conducting  the  same 
business  in  the  same  locality.5 

iHolden's  Adm'rs  v.  McMakin,  4Van  Rensselaer    v.    Emery,    9 

Par.  Eq.  Cas.,  270.  How.  Pr.,  135. 

2  Miller  v.  Jones,  39  111.,  54.  5  Williams  v.   Wilson,   4  Sandf. 

3  Maher  v.  Bull,  44  IH.,  97.  Ch.,  379. 

41 


642 


RECEIVERS. 


[CHAP.  XVII. 


Y.  Real  Property. 


§  772.  Equity  averse  to  interfering  by  injunction  and  receiver  with  pos- 
session of  real  property  under  claim  of  title. 

773.  Long  acquiescence  in  possession  may  bar  relief. 

774.  Injunction  and  receiver  refused  in  proceeding  by  lessor  against 

lessee. 

775.  Refused  heir-at-law  and  devisee  on  bill  to  determine  widow's 

dower. 

776.  Purchaser  at  judicial  sale  allowed  both  remedies. 

777.  Receiver  may  enjoin  waste ;  may  enjoin  breach  of  covenant  by 

tenant. 

778.  When  receiver  and  injunction  granted  in  equitable  action  to  re- 

cover realty ;  tenant  for  life  permitting  taxes  to  be  in  arrears ; 
contract  between  owner  and  tenant. 

779.  Remainder-man  and  tenants  not  allowed  to  enjoin  receiver  from 

dispossessing  them. 

780.  The  relief  as  between  tenants  in  common. 

§  772.  In  considering  the  application  of  the  extraordi- 
nary remedies  under  consideration  in  cases  affecting  real 
property,  the  most  noticeable  feature  to  be  observed  is  the 
extreme  aversion  manifested  by  courts  of  equity  to  any  in- 
terference in  limine  with  the  possession  of  real  estate,  as 
against  a  defendant  in  possession  and  claiming  under  a  legal 
title.  Indeed,  it  may  be  asserted  as  a  general  proposition, 
sustained  by  both  the  English  and  American  authorities, 
that  in  a  controversy  concerning  the  title  to  real  property, 
in  which  plaintiff  asserts  a  legal  title  in  himself,  against  a 
defendant  who  is  in  possession  under  claim  of  legal  title,  and 
in  receipt  of  the  rents,  courts  of  equity  decline  to  lend  their 
extraordinary  aid  either  by  a  receiver  or  by  an  injunction 
in  limine,  and  leave  the  rights  of  the  parties  to  be  deter- 
mined by  a  court  of  law.  And  while  there  may  be  special 
circumstances  of  fraud  or  imminent  danger,  sufficient  in  ex- 
treme cases  to  warrant  a  departure  from  the  rule,  the  gen- 
eral doctrine  as  here  stated  remains  unquestioned,  and  equity 
will  decline  to  interfere  by  the  exercise  of  either  branch  of 
its  extraordinary  jurisdiction,  before  plaintiff  has  established 


CHAP.  XVII.]  INJUNCTIONS. 


C43 


his  title  at  law.1  Indeed,  the  rule  as  stated  necessarily  fol- 
lows from  the  established  doctrine  that  equity  will  not  inter- 
fere when  adequate  relief  may  be  had  at  law.  Hence  courts 
of  equity  will  refuse  to  grant  an  injunction  and  appoint  a 
receiver,  in  a  contest  concerning  the  possession  of  real  prop- 
erty, when  redress  may  be  had  at  law  by  the  usual  methods 
of  procedure,  and  will  leave  the  parties  aggrieved  to  pursue 
their  legal  remedy.  For  example,  a  devisee  of  realty,  claim- 
ing by  his  bill  the  title  and  right  of  possession,  and  that 
defendant  has  unlawfully  usurped  possession  and  continues 
to  hold  without  right,  receiving  income  and  depriving 
plaintiff  of  his  means  of  support,  can  not  have  the  aid  of  an 
injunction  and  a  receiver  in  limine,  even  though  he  alleges 
the  insolvency  of  defendant  in  possession,  but  will  be  left  to 
assert  his  title  by  proceedings  at  law.2 

§  773.  It  may  also  be  a  sufficient  objection  to  disturbing 
the  possession  of  real  property  by  an  injunction  and  a  re- 
ceiver, that  such  possession  has  been  long  acquiesced  in  and 
has  remained  undisturbed  for  many  years.  And  when  the 
property  in  controversy  has  been  held  and  managed  and  its 
proceeds  have  been  applied  by  a  corporation  in  a  particular 
manner  and  for  a  long  term  of  years,  the  possession  will 
not  be  disturbed  by  an  injunction  and  a  receiver  upon  the 
ground  that  such  application  of  the  proceeds  is  a  breach  of 
trust,  unless  the  court  is  satisfied  that  defendant  is  a  mere 
naked  trustee,  without  right  or  discretion  as  to  the  manage- 
ment of  the  property.* 

§  774.  The  general  rule  alread}^  stated,  denying  the  aid 
of  a  receiver  and  an  injunction  as  against  a  defendant  in 
possession  under  claim  of  title,  is  applicable  as  between  a 

1  Lloyd  v.  Passingham,  16  Ves.,  affirmed  on  appeal  to  the  House  of 
59;  S.  C,  3  Meriv.,  697;  Schlecht's  Lords,  4  H.  L.  Rep.,  997. 
Appeal,  60  Pa,  St,  172;  Pfeltz  v.  *  Pfeltz  v.  Pfeltz,  14  Md.,  376. 
Pfeltz,  14  Md,,  376.  See,  also,  3  Skinners  Company  v.  Irish  So- 
Clark  r.  Ridgely,  1  Md.  Ch.,  70;  ciety,  1  Myl.  &  Cr.,  162.  See,  also, 
Willis  v.  Corlies,  2  Edw.  Ch.,  281;  Municipal  Commissioners  of  Car- 
Owen  v,  Homan,  3  Mac,  &  G.,  378,  rickfergus  v.  Lockliart,  Ir.  Rep.,  3 

Eq.,  515. 


G44:  RECEIVERS.  [CHAP.  XVII. 

lessor  and  his  lessee,  the  latter  being  clothed  with  a  legal 
title  and  a  right  to  possession  thereunder.  And  when  the 
owner  of  premises  executes  a  lease  thereof,  under  which  the 
lessee  is  authorized  to  bore  for  and  take  oil  from  the  prem- 
ises, returning  one-fourth  of  the  product  as  rental,  equity 
will  refuse  an  injunction  and  a  receiver  in  a  proceeding 
by  the  lessor  in  aid  of  an  action  at  law  for  a  forfeiture  of 
the  lease.1 

§  775.  When  an  heir-at-law  and  devisee  under  a  will  files 
a  bill  to  determine  the  widow's  dower  in  the  estate,  and 
prays  an  injunction  to  prevent  a  transfer  of  the  property 
and  a  receiver  of  the  rents  and  profits,  the  court  will  not 
interfere  merely  upon  an  allegation  that  the  rents  are  in 
jeopardy,  but  it  must  appear  how  they  are  endangered. 
And  when  the  bill  does  not  allege  that  the  rents  and  profits 
will  be  lost  by  reason  of  insolvency  of  the  persons  who  are 
receiving  them,  or  that  plaintiff  has  not  an  adequate  remedy 
at  law  for  whatever  portion  of  the  rents  he  may  be  entitled 
to,  the  relief  will  be  refused.2 

§  776.  A  purchaser  of  lands  at  a  judicial  sale,  who  has 
obtained  a  sheriff's  deed  of  the  premises  upon  the  expiration 
of  the  statutory  period  of  redemption,  has  been  allowed  a 
receiver  and  an  injunction  in  aid  of  an  action  to  obtain  pos- 
session. And  when,  in  such  an  action,  it  was  alleged  that 
defendants  were  insolvent  and  were  endeavoring  to  defraud 
plaintiff  of  his  rights,  the  court  granted  an  injunction  and 
appointed  a  receiver  to  take  charge  of  the  growing  crops, 
in  order  that  they  might  be  harvested  and  prepared  for 
market,  and  the  proceeds  held  subject  to  the  final  order  of 
the  court.3 

§  777.  A  receiver  may  be  allowed  the  aid  of  an  injunc- 
tion, in  a  proper  case,  to  restrain  the  commission  of  waste 
on  premises  subject  to  his  control.     And  it  is  held  under  the 

i  Chicago  &  Allegheny  Oil  &  Min-        2  Knighton  v.   Young,   22   Md., 

ing  Co.  v.  The  United  States  Petro-  359. 

leum  Co.,  57  Pa.  St.,  83;  9.  C,  6        s  Corcoran  v.  Doll,  35  Cal.,  476. 
Phila.,  521. 


CHAT.  XVII.]  INJUNCTIONS.  045 

Irish  practice,  that  the  receiver  may,  in  a  pressing  case,  file 
his  bill  to  enjoin  the  waste,  and  that  at  the  same  time  with 
moving  for  the  injunction  he  may  move  a  reference  to  a 
master,  to  report  as  to  the  necessity  of  such  proceeding  and 
whether  it  shall  be  continued.1  So  it  has  been  held  proper 
for  the  court,  upon  motion  of  the  receiver,  to  grant  a  con- 
ditional restraining  order  against  the  commission  of  waste 
by  tenants,  without  any  bill  being  filed  for  that  purpose, 
leaving  the  question  to  be  determined  by  the  court  when 
cause  is  shown  against  the  restraining  order.2  So  when 
premises  subject  to  a  receivership  are  held  by  tenants  under 
a  lease,  with  a  covenant  against  using  the  premises  for  a 
particular  purpose,  as  for  a  shop,  on  pain  of  forfeiture  in 
case  of  a  breach  of  the  covenant,  the  receiver  may  have 
the  aid  of  an  injunction  to  restrain  a  tenant  from  using  the 
premises  for  the  purpose  prohibited  by  the  covenant.3 

§  778.  In  an  equitable  action  for  the  recovery  of  real 
property,  upon  the  ground  that  the  proceedings  by  which 
plaintiff's  ancestor  had  been  divested  were  void  by  reason 
of  fraud  and  mistake,  and  also  for  want  of  jurisdiction  in 
the  court  in  which  such  proceedings  were  had,  it  is  proper 
to  allow  a  receiver  and  an  injunction,  when  it  appears  that 
defendants  in  possession  and  collecting  the  rents  are  irre- 
sponsible, and  that  the  premises  are  in  a  ruinous  condition 
and  will  continue  to  deteriorate  if  left  in  defendant's  posses- 
sion during  the  litigation.4  And  on  a  bill  against  tenant  for 
life,  seeking  an  injunction  to  restrain  him  from  disposing  of 
the  property,  if  the  tenant  for  life  in  possession  has  per- 
mitted the  taxes  to  be  in  arrears,  the  court  may  appoint  a 
temporary  receiver  of  as  much  of  the  rents  and  income  as 
will  suffice  to  pay  the  taxes  due  and  in  arrear,  unless  de- 
fendant shall  pay  them  within  a  specified  time.5    But  a  mere 

1  Mangier.  Lord  Fingall,  1  Hog.,  4 Rogers  v.  Marshall,  6  Ab.  Pr., 

143.  N.  S.,  457. 

2Cronin  v.   McCarthy,   Flan.    &  scairns  v.  Chabert,  3  Edw.  Ch.f 

K,  49.  312. 

3  Mason  v.  Mason,  Flan.  &  K,  429. 


646 


RECEIVERS. 


[chap.  XVII. 


contract  between  the  owner  of  land  and  a  tenant,  providing 
for  the  working  of  the  land  by  the  tenant  for  a  given  time, 
the  owner  to  receive  compensation  out  of  the  crops  grown 
thereon,  does  not  entitle  the  owner  to  an  injunction  to  re- 
strain the  tenant  from  removing  the  crops,  or  to  a  receiver 
to  manage  the  land  and  take  possession  of  the  ungathered 
crop.1 

§  779.  When  property  has  been  placed  in  the  hands  of  a 
receiver,  a  remainder-man  and  tenants  of  the  premises  have 
been  refused  an  injunction  to  restrain  the  receiver  from 
turning  them  out  of  possession,  the  court  holding  that  their 
interest  was  insufficient  to  sustain  such  an  application.2 

§  780.  "While  courts  of  equity  are  usually  averse  to  the 
exercise  of  their  extraordinary  jurisdiction  as  against  ten- 
ants in  common  of  realty,  there  are  cases  where  the  relief 
is  proper  upon  the  ground  of  exclusion  of  his  co-tenant  by 
a  tenant  in  possession,  who  is  in  insolvent  circumstances.3 
And  a  plaintiff,  claiming  a  moiety  of  an  estate  as  tenant  in 
common  with  defendant  who  was  in  possession  of  the 
whole,  has  been  allowed  a  receiver  of  the  rents  and  profits 
of  such  moiety,  and  an  injunction  to  restrain  defendant  from 
collecting  the  rents  thereof.4 


i  Williams  v.  Green,  37  Ga.,  37. 

2  Wynne  v.  Lord  Newborough,  1 
Ves.  Jim.,  164. 

3  See  Williams  v.  Jenkins,  11  Ga., 
595 ;  Street  v.  Anderton,  4  Bro.  C. 


C,   414;  Sandford  v.   Ballard,    30 
Beav.,  109. 

4  Hargrave  v.  Hargrave,  9  Beav., 
549. 


CHAPTER  XYTE. 

OF  THE  EECEIYER'S  COMPENSATION. 

§  781.    Compensation  regulated  by  court  in  the  absence  of  legislation. 

782.  English  practice ;  no  settled  rule ;  reference  to  master  to  deter- 

mine. 

783.  No  fixed  rule  in  this  country ;  compensation  dependent  upon  cir- 

cumstances of  case. 

784.  The  rule  in  Massachusetts ;  reasonable  pay  for  person  of  ordi- 

nary ability  allowed ;  rale  in  Maryland. 

785.  Receivers  sometimes  allowed  same  rates  as  guardians,  executors 

or  administrators ;  commissions  on  receipts  and  disbursements ; 
New  York  doctrine. 

786.  Receivers  in  lieu  of  executors  allowed  same  compensation. 

787.  Receiver  over  railway  allowed  more  liberal  compensation  than 

in  ordinary  cases. 

788.  Entitled  to  compensation  for  work  performed  by  others ;  farms 

managed  by  overseers ;  commission  on  receipts  and  disburse- 
ments. 

789.  When  receiver  allowed  to  make  rests. 

790.  When  refused  extra  compensation  for  journeys  to  foreign  country 

to  conduct  litigation. 

791.  When  receiver  of  insurance  company  allowed  commissions  on 

premium  notes  surrendered. 

792.  Payment  into  court  to  avoid  receiver's  compensation. 

793.  Receiver  over  minor  denied  extra  compensation  for  attending 

survey  of  estate. 

794.  Doctrine  of  the  Irish  Chancery ;  receiver  appointed  by  consent. 

795.  Partner  appointed  receiver  not  allowed  compensation. 

796.  Receiver  can  not  have  judgment  against  the  parties  on  motion ; 

practice  in  fixing  compensation ;  part  of  compensation  taxed 
as  costs  against  plaintiff ;  chargeable  on  fund  ;  appeal. 

§  781.  The  power  of  courts  of  equity  to  fix  the  compen- 
sation of  their  own  receivers  is  well  established,  and  results 
necessarily  from  the  relation  which  the  receiver  sustains  to 
the  court,  he  being  its  officer  or  agent,  deriving  his  func- 
tions only  from  that  source.     In  the  absence,  therefore,  of 


G4.S 


KECEIVERS. 


[chap.  XVIII. 


any  legislation  regulating  the  receiver's  salary  or  compen- 
sation, the  matter  is  loft  entirely  to  the  determination  of 
the  court  from  which  he  derives  his  appointment.1  And  in 
passing  upon  the  compensation  of  a  receiver,  an  appellate 
court  will  ordinarily  defer  much  to  the  judgment  of  the 
court  below  by  which  the  receiver  was  appointed,  that  court 
having  had  the  supervision  of  his  conduct.2 

§  782.  Under  the  practice  of  the  English  Court  of  Chan- 
cery, there  seems  to  have  been  no  settled  or  established  rule 
as  to  the  amount  of  compensation  to  be  allowed  receivers 
for  their  services.  In  an  early  case  in  that  court,  it  was  or- 
dered by  the  terms  of  the  decree  appointing  the  receiver, 
that  he  should  be  allowed  a  reasonable  salary  for  his  care 
and  trouble  in  the  management  of  the  estate,  such  salary 
to  be  determined  by  the  master  in  chancery.3  And  the 
usual  practice  seems  to  have  been  to  leave  the  matter  to  the 
determination  of  a  master,  and  these  officers  were  gov- 
erned in  their  allowance  by  the  degree  of  difficulty  or  labor 


i  Gardiner  v.  Tyler,  3  Keyes,  505 ; 
S.  C,  2  Ab.  Ct.  Ap.  Dec,  247 ;  Bald- 
win v.  Eazler,  34  N.  Y.  Supr.  Ct. 
E.,  275;  Magee  v.  Cowperthwaite, 
10  Ala.,  966;  Stretch  v.  Gowdey,  3 
Tenn.  Cli.,  565.  As  to  the  allow- 
ance to  a  receiver  of  an  insolvent 
bank  for  bis  own  compensation,  for 
clerk  hire,  expenses  of  receivership 
and  on  account  of  moneys  collected 
and  misappropriated  by  an  attor- 
ney, see  Union  Bank  Case,  37  N. 
J.  Eq.,  420,  affirmed  on  appeal  sub 
nom.  Sandford  v.  Clarke,  38  N. 
J.  Eq.,  265.  As  to  the  commissions 
allowed  to  receivers  of  insolvent 
life  and  fire  insurance  companies 
under  the  laws  of  New  York,  the 
basis  upon  which  such  commissions 
are  computed,  and  the  liability  of 
such  receivers  to  payment  of  inter- 
est upon  their  balances,  see  At- 
torney-General v.  North  America 


Life  Insurance  Co.,  26  Hun,  294. 
See,  also,  Attorney-General  v.  Con- 
tinental Life  Insurance  Co.,  27  Hun, 
524 ;  In  re  Security  Life  Insurance 
&  Annuity  Co.,  31  Hun,  36;  In  re 
Commonwealth  Fire  Insurance  Co. , 
32  Hun,  78. 

2  Morgan  v.  Hardee,  71  Ga.,  736; 
Hinckley  v.  Railroad  Co.,  100  U.  S., 
153. 

3  Carlisle  v.  Berkley,  Amb.,  599; 
Special  Bank  Commissioners  v. 
Franklin  Institution,  11  E.  I.,  557. 
And  when  a  receiver  was  appointed 
for  the  management  of  real  estate, 
and  to  collect  the  rents  during  the 
minority  of  an  infant  tenant  for 
life,  and  the  rental  was  stated  to 
be  about  £2,000  per  year,  the  re- 
ceiver's compensation  was  fixed  by 
the  court  at  a  salary  of  £60  per 
year.  Newport  v.  Bury,  23  Beav., 
30. 


CHAP.  XVIII.] 


COMPENSATION. 


G49 


involved  in  the  case,  increasing  the  compensation  when 
there  was  extraordinary  difficulty  in  collecting  the  funds,  or 
diminishing  it  if  there  was  any  extraordinary  facility  in 
their  collection.1 

§  783.    In  this  country,  as  in  England,  no  established  rule 
has  been  fixed  for  determining  the  amount  of  compensation 


1  Day  v.  Croft,  2  Beav.,  488.  The 
considerations  involved  in  deter- 
mining the  amount  of  compensa- 
tion to  be  allowed  receivers,  under 
the  English  practice,  are  very 
clearly  stated  in  this  case  by  Lord 
Langdale,  Master  of  the  Rolls,  as 
follows,  p.  491:  "Various  repre- 
sentations having  been  made  at 
the  bar,  as  to  the  principle  and  the 
practice  adopted  in  the  offices  of 
the  different  masters  in  respect  of 
receiver's  allowances,  I  thought  it 
right,  before  disposing  of  the  case, 
to  inquire  of  the  masters  what 
were  the  principles  upon  which 
they  acted,  and  the  practice  adopted 
on  this  point  in  their  several  offices. 
The  masters  have  each  of  them 
been  good  enough  to  furnish  me 
with  a  certificate,  and  I  find  that 
there  is  no  general  rule,  which  uni- 
versally prevails,  as  to  the  allow- 
ance of  a  receiver.  Where  the 
receipts  consist  of  rents  of  free- 
hold and  leasehold  estates,  51.  per 
cent,  upon  the  amount  received  is 
most  frequently  allowed.  If  there 
be  any  special  difficulty  in  collect- 
ing the  rents,  on  account  of  the 
sums  being  extremely  small,  or  of 
the  payments  being  very  frequent, 
as  weekly  payments,  then  the  al- 
lowance is  increased ;  on  the  other 
hand,  if  there  should  be  very 
great  facility  in  receiving  the  rents, 
then  less  than  51.  per  cent,  is  al- 
lowed.    One    of   the    masters  has 


certified  to  me  a  case,  where,  after 
consideration,  he  allowed  only  4/. 
per  cent,  for  the  receipts  of  rents 
and  profits  of  freehold  and  lease- 
hold estates.  Another  master  has 
certified  to  me  a  case  in  which  the 
sum  paid  to  the  receiver  amounted 
to  300Z.  a  year  for  the  first  year; 
the  receiver  was  afterward  al- 
lowed 1501.  only  for  a  succession  of 
years,  which  was  afterward  re- 
duced to  50Z.  a  year,  for  the  receipt 
of  the  same  rents.  It  can  not, 
therefore,  be  considered  as  an  uni- 
versal or  general  ride,  that  51.  per 
cent,  should  be  allowed  even  upon 
the  receipts  of  rents  and  profits. 
It  may  be  increased  if  there  be 
any  extraordinary  difficulty,  or  di- 
minished if  there  be  any  extraor- 
dinary facility  in  the  collection. 
With  respect  to  other  receipts,  each 
master  considers  liimself  bound  to 
have  regard  to  the  degree  of  facil- 
ity or  difficulty  there  may  be  in 
receiving  them.  They  have  some- 
times allowed  two  and  one-fourth 
per  cent.,  but  for  gross  sums  of 
money  this  has  been  very  much 
reduced,  and  one  and  one-fourth 
per  cent,  has  been  allowed  upon 
many  occasions.  It  appears,  there- 
fore, that  the  masters,  as  they 
ought,  consider  upon  each  occa- 
sion, what  is  fit  or  proper  to  be 
allowed,  having  regard  to  the  de- 
gree of  difficulty  or  facility  expe- 
rienced bv  the  receiver." 


G50 


RECEIVERS. 


[chap.  XVIII. 


to  be  allowed  receivers,  and  it  is  from  the  nature  of  the  case 
quite  impracticable  to  establish  an  inflexible  rule.  The  com- 
pensation is,  therefore,  usually  determined  according  to  the 
circumstances  of  the  particular  case,  rather  than  by  any 
fixed  principles  or  established  rate  of  percentage.1  It  may 
be  said  in  general  terms,  that  a  receiver's  compensation 
should  correspond  with  the  degree  of  business  capacity,  in- 
tegrity and  responsibility  required  in  the  management  of  the 
affairs  entrusted  to  him,  and  that  a  reasonable  and  fair  com- 
pensation should  be  allowed  according  to  the  circumstances 
of  each  particular  case.2  And  when  a  statute  under  which 
a  receiver  is  appointed  authorizes  the  payment  of  a  reason- 
able compensation,  it  is  held  that  such  compensation  can  be 
best  determined,  not  by  a  percentage  upon  his  receipts,  but 
by  considering  the  responsibility  assumed,  the  skill  and  labor 
expended,  and  the  amounts  usually  paid  for  similar  services. 
It  is  also  proper  to  allow  the  receiver  compensation  from 


1  Abbott  v.  Baltimore  &  Rappa- 
bauiiock  Steain  Packet  Co.,  4  Md. 
Ch.,  310.  And  see  French  v.  Gif- 
ford,  31  Iowa,  428;  Cowdreyv.  The 
Railroad  Co.,  1  Woods,  331. 

-'  French  v.  Gifford,  31  Iowa,  428 ; 
Jones  v.  Keen,  115  Mass.,  170.  In 
French  v.  Gifford,  31  Iowa,  428,  the 
case  came  up  on  exceptions  to 
the  report  of  a  referee  fixing  the 
amount  of  compensation  to  be 
allowed  the  receiver  of  a  banking 
institution.  Mr.  Justice  Miller,  de- 
livering the  opinion,  says :  ' '  While 
we  concede  that  the  receiver  should 
receive  a  compensation  correspond- 
ing to  the  high  degree  of  business 
capacity,  integrity,  and  responsi- 
bility required  in  cases  of  this  char- 
acter, and  which  was  secured  in  the 
person  of  the  receiver  in  tlus  case, 
yet  we  feel  it  our  duty  to  allow  only 
such  sum  as  will  be  such  reasonable 
compensation.  There  can  be  no  rea- 
sonable grounds  to  doubt  tbat  the 


receiver  in  this  case,  or  some  other 
person  possessing  equal  qualifica- 
tions, could  have  been  employed  by 
private  contract  to  perform  the 
services  rendered  in  this  case  for 
half  the  amount  allowed  by  the 
referee.  This,  it  seems  to  us,  is  the 
fan;  and  reasonable  test  by  which 
the  amount  of  compensation  to  be 
allowed  should  be  determined. 
While  it  may  be  true  that  an  in- 
dividual of  the  required  qualifica- 
tions, if  engaged  in  a  lucrative 
private  business,  could  not  be  in- 
duced to  abandon  such  business  for 
a  temporary  appointment  of  this 
character  without  extraordinary 
compensation,  yet  one  of  wealth 
and  leisure  may  readily  be  found 
(as  in  this  case),  who  would  under- 
take the  trust  for  a  reasonable  and 
ordinary  compensation.  We  would 
not  be  warranted  in  allowing  ex- 
traordinary compensation,  unless 
in  a  case  of  imperative  necessity." 


OHAP.  XVIII.]  COMPENSATION.  051 

time  to  time  before  the  close  of  his  receivership,  without 
requiring  him  to  wait  until  its  determination.  But  the 
allowance  for  one  years  services  is  not  necessarily  a  prece- 
dent for  a  subsequent  year,  and  in  proportion  as  his  re- 
sponsibility is  lightened  and  the  degree  of  skill  and  labor 
required  of  him  is  diminished,  should  his  compensation  be 
decreased.1  Upon  the  other  hand,  although  his  compensa- 
tion may  have  been  fixed  by  a  salary,  yet  if  the  receiver's 
duties  prove  to  be  more  arduous  and  onerous  than  originally 
expected  either  by  the  receiver  or  b}r  the  court,  it  is  proper 
to  grant  him  an  allowance  in  addition  to  his  salary.2 

§  784.  It  is  held  in  Massachusetts,  that  the  governing- 
principle  in  fixing  the  compensation  to  be  allowed  receiv- 
ers for  services  rendered  by  them  in  the  management  of 
their  trust  is  to  allow  them  such  a  sum  as  would  be  a  rea- 
sonable compensation  for  the  services  of  a  person  of  ordi- 
nary ability,  and  competent  to  perform  the  duties  of  the 
receivership.  And  in  fixing  this  amount  the  court  is  not 
governed  by  the  special  qualifications  and  standing  of  the 
person  wrho  may  be  appointed,  but  will  only  allow  what 
would  be  a  reasonable  amount  for  a  person  of  ordinary 
ability  performing  the  work,  and  this  amount  will  not  be 
fixed  upon  the  basis  of  a  percentage  or  fixed  commission 
on  the  amount  of  funds  collected  by  the  receiver.3    And 

1  Special  Bank  Commissioners  v.  collections  of  notes  and  accounts, 
Franklin  Institution,  11  R.  I.,  557.  and  otherwise.     In  support  of  this 

2  Farmers  Loan  &  Trust  Co.  v.  charge  evidence  was  introduced  as 
Central  Railroad,  8  Fed.  Rep.,  60.  to  the  usual  rates  of  chai-ge  upon 

3  Grant  v.  Bryant,  101  Mass.,  567.  commercial  transactions  by  corn- 
See,  also,  Jones  v.  Keen,  115  Mass.,  mission  merchants  and  others,  and 
170.  Grant  v.  Bryant,  101  Mass.,  as  to  the  experience,  capacity  and 
567,  was  the  case  of  a  receiver  upon  mercantile  standing  of  the  receiver. 
a  bill  in  equity  to  wind  up  a  part-  The  court  held  that  the  compensa- 
nership  which  had  been  dissolved,  tion  should  be  limited  to  a  reason- 
The  receiver,  in  submitting  his  ac-  able  amount  for  the  services  re- 
counts, charged  as  compensation  quired  and  rendered  by  a  person 
for  his  services  a  commission  of  of  ordinary  standing  and  ability 
two  and  a  half  per  cent,  on  the  competent  for  such  duties,  and 
gross  amount  of  assets  coming  into  that  it  should  not  be  based  upon 
his  hands  by  the   sale    of   stock,  the  usages  or  rates  of  profit  in  any 


652  receivers.  [cnAP.  XVIII. 

when  a  master  in  chancery,  to  whom  the  receiver's  accounts 
have  been  referred,  has  fixed  the  amount  to  be  allowed  the 
receiver  for  his  own  compensation,  as  well  as  for  counsel 
fees,  and  the  evidence  is  not  preserved,  the  court  will  not 
pass  upon  the  question  upon  exceptions  to  the  master's  re- 
port.1 But  in  Maryland,  it  is  regarded  as  proper  to  allow 
the  same  rates  of  compensation  which  are  fixed  by  rule  of 
court  on  sales  made  b}^  trustees,  under  decrees  and  orders 
of  the  court.2 

§  785.  In  some  instances,  the  courts  have  seen  fit  to  fix 
the  compensation  of  receivers  by  analogy  to  the  cases  of 
guardians,  executors,  or  other  persons  occupying  fiduciary 
relations.  Thus,  in  Alabama,  it  has  been  held  to  be  the 
more  appropriate  method  of  determining  the  compensation 
to  allow  a  percentage  on  receipts  and  disbursements,  as  in 
the  case  of  guardians,  although  such  allowance  is  not  con- 
sidered as  fixing  an  imperative  rule.3  And  in  New  York,  it 
has  been  held  that  in  the  absence  of  proof  as  to  the  amount 
of  labor  performed  by  a  receiver  in  the  discharge  of  his 
trust,  it  was  reasonable  and  proper  to  fix  his  compensation 
in  accordance  with  the  rates  or  commissions  prescribed  by 
law  for  the  payment  of  executors  or  administrators,  and 
that  this  course  might  be  pursued  when  it  did  not  appear 
that  there  was  any  peculiar  difficulty  in  the  duties  per- 
formed.4    And  it  has  been  held,  when  this  method  was 

branch  of    commercial    or    other  through  their    hands,    but  allows 

business,  nor  upon  the  special  qual-  tbem  such  an  amount  as  would  be 

ifications  and  standing  of  the  per-  reasonable  for  the  services  required 

son  who  may  happen  to  perform  of  and  rendered  by  a  person  of  or- 

the  services.     The  question  of  com-  dinary  ability,  and  competent  for 

pensation  being  reserved  for  the  such  duties  and  services."    But  see 

full  court,  it  was  held  that  this  rule  Cowdrey  v.   The  Railroad    Co.,    1 

was  the  correct  one.     The  court,  Woods,  331. 

Ames,  J.,  say,  p.  570:     "The  rule  i  Jones  v.  Keen,  115  Mass.,  170. 

adopted  as  to  the  compensation  of  -  Abbott  v.  Rappahannock  Steam 

the  receiver  was  entirely  correct.  Packet  Co.,  4  Md.  Ch.,  310. 

The    court  does  not  regulate  the  3  Ma  gee    v.    Cowperthwaite,    10 

compensation  of   its  officers  upon  Ala.,  966. 

the  basis  of    a   fixed  commission  4Muller  v.  Pondir,  6  Lans.,  481. 

upon  the  amount  of  money  passing  See,    also,    Bennett   v.  Chapin,   3 


CHAP.  XVIII.]  COMPENSATION.  653 

adopted,  that  the  receiver  was  entitled  to  commissions  on 
the  value  of  all  the  assets  taken  out  of  his  hands  and  deliv- 
ered to  the  parties  by  an  order  of  court  settling  the  suit  by 
consent  of  the  parties,1  and  also  entitled  to  commissions 
upon  both  his  receipts  and  disbursements.2  The  courts  of 
New  York,  however,  although  sometimes  following  the 
method  above  indicated,  do  not  consider  themselves  bound 
by  the  rates  fixed  by  law  for  executors  and  administrators, 
and  still  regard  the  question  as  one  to  be  determined  by  the 
court  in  the  absence  of  any  legislation  regulating  the  sub- 
ject.3 

§  78G.  When  receivers  have  been  appointed  in  place  of 
executors  of  the  estate  of  a  deceased,  and  have  acted  in 
conjunction  with  a  remaining  executor  appointed  under  the 
will  of  the  deceased,  it  has  been  regarded  as  a  fair  and 
equitable  mode  of  making  compensation  for  their  services 
to  deal  with  them  as  trustees  or  executors  under  the  will, 
having  real  and  personal  estate  in  charge,  and  to  allow 
them  the  same  rate  of  compensation  or  the  same  commis- 
sions upon  their  disbursements  as  are  paid  to  such  executors.4 

§  787.  In  the  case  of  a  receiver  over  a  railway  company, 
entrusted  with  the  management  and  operation  of  the  road, 
since  his  duties  and  responsibilities  are  much  greater  than 
those  of  an  ordinary  receiver  appointed  merely  to  take  and 
hold  money,  a  more  liberal  rate  of  compensation  would 
seem  to  be  permissible  than  in  ordinary  cases.  And  it  is 
not  regarded  as  a  proper  test,  in  such  case,  to  inquire  what 
another  competent  person  would  have  been  willing  to  do 
the  work  for,  since  the  office  is  not  put  up  at  auction.  The 
amount  of  such  a  receiver's  compensation  will,  therefore, 
be  graduated  according  to  the  peculiar  duties  and  responsi- 

Sandf.,  673;  Howes  v.Davis,  4  Ab.  S.   C,   2  Ab.   Ct.   Ap.   Dec,   247; 

Pr.,  71.  Baldwin  v.  Eazler,  34  N.  Y.  Supr. 

i  Bennett   v.    Chapin,    3   Sandf.,  Ct.  R.,275.    See  Bennett  v.  Chapin, 

673.  3  Sandf.,  673. 
2 Howes  v.  Davis,  4  Ab.  Pr.,  71.        4  Holcombe  v.  Executors  of  Hol- 

3  Gardiner  v.  Tyler,  3  Keyes,  503 ;  combe,  2  Beas.,  417. 


654 


RECEIVERS. 


[CHAP.  XVIII. 


bilities  resting  upon  him  in  the  control  and  management  of 
the  road.1  And  in  determining  the  compensation  to  be  paid 
to  railway  receivers  for  their  services,  it  is  proper  to  consider 
their  fitness  for  their  duties,  their  business  and  financial 
experience,  the  time  devoted  to  their  trust,  and  the  diligence 


^owdrey  v.  The  Eailroad  Co.,  1 
"Woods,  331.     Mr.  Justice  Bradley, 
in  his  learned  opinion  in  this  case, 
says,  p.  345:  "It  would  hardly  be 
a  proper  rule  for   governing  this 
case,  to  inquire  what  another  even 
competent  person  would  have  been 
willing  to  do  the  work  for.     The 
receiver's  office  is  not   put  up  at 
auction.     His  compensation  is  not 
fixed  on  that  principle  at  all.     The 
chancellor  selects  a  person  whom 
he   regards  competent  and  trust- 
worthy, and  the  amount  of  com- 
pensation is  graduated  somewhat 
by  the  duties  and   somewhat    by 
the  responsibilities  of  the  situation. 
Where  a  receiver  is  a  manager  as 
well  as  a  mere  receiver,  his  duties 
and  responsibilities  are  largely  in- 
creased ;  and  the  management  of  a 
business  like  that  of  a  railroad  is 
one  of  the  most  difficult  and  re- 
sponsible duties  that  a  receiver  is 
charged  with.     It  requires  a  man 
of  first  rate  qualities  and   attain- 
ments.    Now,  we  have  it  in  proof 
that  the  railroad  presidents  of  the 
country  receive  various  sums  from 
$3,000  to  $20,000  a  year,  many  of 
$5,000,    some   of    $10,000,    a   few 
above  $10,000.    Most  of  the  defend- 
ant's witnesses  think  that  $5,000  a 
year  would  be  ample  compensation 
to   the  receiver  for  his    services, 
whilst  most  of  the  witnesses  called 
for  the  receiver  think  that  $15,000, 
coin,  is  not  any  too  much ;  that  he 
saved  much  more  than  that  to  the 


road,  etc.  The  receiver's  income 
before  his  appointment  was,  by  the 
estimation  of  one  witness,  about 
$7,000  a  year,  said  to  be  of  a  per- 
manent character ;  all  of  which  he 
was  obliged  to  give  up  when  he 
assumed  the  duties  of  the  receiver- 
ship ;  and  he  himself  says,  that  he 
would  not  have  consented  to  take 
the  office  for  less  than  $15,000  a 
year.  The  previous  salaries  given 
by  the  defendant  railroad  company 
have  been  referred  to  as  being  only 
$5,000 ;  and  sometimes  not  so  much 
as  that.  In  view  of  all  this  evi- 
dence, of  the  assistance  which  the 
receiver  had  around  him,  and  of 
the  principles  which  the  law  lays 
down  with  regard  to  the  compen- 
sation of  a  receiver,  I  am  inclined 
to  think  that  $10,000  in  coin  per 
annum  would  be  a  fair  rate  of  com- 
pensation in  this  case.  It  seems  to 
me  that  $15,000  is  large,  larger  than 
what  any  (except  two  or  three)  of 
the  presidents  of  our  most  impor- 
tant railroads  in  the  country  receive. 
It  also  seems  to  me  that  the  peculiar 
duties,  responsibilities  and  account- 
ability of  a  receiver  entitle  him  to 
a  larger  amount  than  would  be 
demanded  by  the  head  officer  of  an 
ordinary  railroad  of  this  size  and 
business.  An  allowance  of  $10,000 
coin  per  annum  will,  therefore,  be 
made  for  the  receiver  Walker's 
compensation  during  the  time  he 
was  such  receiver." 


CHAP.  XVIII.]  COMPENSATION.  655 

and  thoroughness  displayed  in  the  discharge  of  their  duties.1 
So  it  is  proper  to  allow  a  railway  receiver  additional  com- 
pensation for  services  rendered  by  him  as  superintendent 
and  as  attorney,  when  he  has  performed  such  services  in  ad- 
dition to  those  of  receiver,  thereby  saving  the  expense  of 
employing  such  additional  services.2  And  in  general  it  may 
be  said,  that  the  courts  are  inclined  to  treat  the  compensa- 
tion of  a  receiver  over  a  railway  as  resting  largely  in  the 
discretion  of  the  court  appointing  him,  and  when  the  testi- 
mony is  conflicting  as  to  the  value  of  his  services,  an  appel- 
late court  is  not  inclined  to  interfere  with  the  exercise  of 
such  discretion.3  But  when  the  same  person  is  appointed 
receiver  over  a  railway  in  two  different  suits  brought  by 
different  parties  in  a  state  court,  one  of  which  is  removed 
to  the  federal  court,  which  court  fixes  the  amount  of  the 
receiver's  compensation  in  that  case  and  finds  a  balance  due 
from  him,  which  he  is  ordered  to  pay  into  court,  he  is  not 
entitled  to  have  such  amount  refunded  to  him  in  payment 
of  his  compensation  afterward  fixed  in  the  suit  in  the  state 
court,  the  parties  to  the  former  suit  not  having  been  heard 
as  to  the  amount  of  such  compensation  in  the  latter  suit.4 

§  788.  A  receiver  is  entitled  to  compensation  for  his  serv- 
ices, although  the  actual  work  of  managing  the  property 
entrusted  to  him  is  performed  by  others,  as  in  the  case  of 
farms  or  plantations  in  the  receiver's  custody,  which  lie 
manages  by  overseers  appointed  and  employed  by  himself, 
and  for  whose  management  he  is  responsible.5  But  if  his 
compensation  is  limited  by  statute  to  a  commission  upon  his 
receipts  and  disbursements,  such  commission  will  be  com- 
puted only  upon  the  amount  actually  received  and  disbursed 


JMcArthur  v.  Montclair  R.  Co.,  5 p^ce  v>  White,  Bail.  Eq.,   240. 

27  N.  J.  Eq.,  77.  And  it  was  held  that,  in  such  a  i  iftsi  ■. 

2  Farmers   Loan  &  Trust  Co.  v.  receivers  being  paid  by  commis- 

Central  Railroad,  8  Fed.  Rep.,  60.  sions,  the  receiver  was  entitled  to 

'Hinckley  v.    Railroad  Co.,   100  the  usual   commissions,    although 

U.  S.,  153.  they  might  seem  to  be  more  than  a 

4 In  re  Hinckley,  3   Fed.  Rep.,  reasonable  compensation   for    the 

556.  services  rendered. 


650  RECEIVEES.  [CHAP.  XTIII. 

by  him.  And  if,  under  the  order  of  the  court,  he  has  per- 
mitted the  business  to  be  principally  conducted  by  the  par- 
ties in  interest,  who  have  transacted  the  business  as  before 
the  receivership,  making  purchases  and  sales  and  receiving 
and  disbursing  moneys,  the  receiver  will  not  be  allowed 
commissions  upon  their  receipts  and  disbursements.1  So 
when  the  compensation  is  fixed  by  statute  by  a  commission 
upon  receipts  and  disbursements,  a  second  receiver,  appointed 
upon  the  death  of  a  former  one,  who  succeeds  to  his  duties 
and  receives  the  funds  which  were  in  his  hands  at  the  time 
of  his  death,  is  not  entitled  to  a  commission  thereon  when 
such  commission  had  been  paid  to  the  former  receiver.  In 
such  case,  it  is  the  service  or  duty  of  collecting  the  fund 
which  entitles  the  receiver  to  a  commission,  and  not  the 
mere  receipt  of  money  from  his  predecessor  who  had  already 
received  a  commission  for  its  collection.2 

§  789.  "While  the  courts,  in  cases  where  receivers  have 
been  paid  by  a  commission  or  percentage  upon  the  funds 
received,  have  sometimes  allowed  them  to  make  annual 
rests,  and  to  charge  their  commissions  upon  the  amounts  as 
thus  ascertained,  a  receiver  will  not  be  allowed  to  make  a 
new  rest  every  time  he  makes  a  deposit  in  bank,  or  to  begin 
with  full  commissions  from  the  date  of  such  rest.3 

§  790.  A  receiver  will  not  be  allowed  extra  compensation 
for  his  services  and  expenses  incurred  by  him  in  making 
journeys  to  a  foreign  country,  for  the  purpose  of  pros- 
ecuting legal  proceedings  to  recover  money  due  to  the 
estate,  when  such  journeys  have  not  been  expressly  author- 
ized by  the  court,  even  though  authorized  and  approved  by 
many  of  the  parties  interested  in  the  estate.  And  in  pass- 
ing upon  the  question  of  compensation  in  such  a  case,  the 
court  will  not  consider  any  agreements  made  by  the  parties 
in  interest  ^Yith  the  receiver,  with  regard  to  his  undertaking 
such  journeys,  or  his  compensation  therefor.4 

*Inre  Woven  Tape  Skirt  Co.,  85  3  Bennett  v.   Cliapin,   3    Sandf., 

N.  Y.,  50G.  G73. 

'-'  Attorney-General  v.  Continental  *  Malcolm  v.  O'Callaghan,  3  Myl. 

Life  Insurance  Co.,  32  Hun,  223.  &  Cr.,  52. 


CHAI\  XVIII.]  COMPENSATION".  6  ">7 

§  701.  "Where,  under  the  laws  of  a  state,  the  compensa- 
tion of  receivers  is  fixed  at  a  certain  percentage  on  their 
receipts  and  disbursements,  and  the  receiver  of  an  insolvent 
insurance  company  holds  premium  notes  due  to  the  com- 
pany from  its  stockholders,  in  trust  for  the  double  purp,  >se 
of  paying  the  creditors  of  the  corporation  and  of  distrib- 
uting the  surplus  among  the  stockholders,  if  he  surrenders 
a  portion  of  the  notes  to  the  shareholders  by  order  of  court, 
it  may  be  regarded  as  so  much  money  received  and  paid 
over  for  the  purposes  of  the  trust,  and  he  will  be  allowed 
his  commission  thereon.  In  such  case,  however,  the  com- 
mission will  be  allowed  only  upon  the  actual  value  of  the 
notes,  and  not  upon  such  notes  as  were  not  collectible.1 

§  792.  It  would  seem  that  a  receiver  has  no  vested  right, 
by  virtue  of  his  appointment,  to  collect  the  entire  estate 
over  which  he  is  appointed,  when  persons  indebted  are  will- 
ing and  offer  to  pay  money  due  into  court,  thereby  avoiding 
a  large  compensation  or  poundage  to  which  the  receiver 
would  be  entitled  if  the  money  passed  through  his  hands.2 

§  793.  "When  a  receiver  over  the  estate  of  a  minor 
voluntarily  and  without  an  order  of  court  attended  a  survey 
of  the  estate,  the  expenses  of  which  were  paid  out  of  the 
estate,  it  was  held  that  he  was  not  entitled  to  any  extra  re- 
muneration for  his  own  services  in  the  matter.3 

§  794.  Under  the  practice  of  the  Irish  Court  of  Chan- 
cery, it  is  held  that  if  the  court,  in  appointing  a  receiver, 
does  not  intend  that  he  shall  receive  any  compensation  or 
poundage,  it  should  be  so  expressly  provided  in  the  order 
of  appointment,  and  if  not  thus  provided,  he  is  entitled  to 
his  compensation  ex  dehito  jastitiae}  But  when,  as  is  fre- 
quently the  practice  in  that  court,  a  receiver  is  appointed 
by  consent  of  the  parties,  the  consent  should  fix  the  amount 
of  salary  which  he  shall  receive,  since  otherwise  the  court 
will  not  allow  him  any  compensation.5 

1  Van  Buren  v.  Chenango  County  3  In  re  Ormsby,  1  Ball  &  B.,  189. 

Mutual  Insurance  Co.,  12Barb.,G71.  4  Bevan  v.  White,  8  Ir.  Eq.,  675. 

'-'  Haigh  r.  Grattan,  1  Beav.,  201.  5  Burke  r.  Burke,  Flan.  &  K.,  89. 
42 


658  RECEIVERS.  [CHAP.  XVIII. 

§  795.  While  there  are  some  cases  to  be  met  with  in  the 
reports  in  which  the  plaintiff  partner,  in  an  action  for  a 
dissolution  of  a  partnership  and  for  a  receiver,  has  been 
himself  appointed  receiver,  the  practice  may  be  regarded 
as  an  unusual  one,  and  only  to  be  upheld  on  the  implied 
condition  that  he  will  discharge  the  duties  of  the  office  free 
of  charge  to  the  fund  or  estate.  Such  a  receiver  will  not, 
therefore,  in  passing  his  accounts,  be  allowed  any  compen- 
sation for  his  own  services.1  And  when  a  surviving  partner 
is  made  a  receiver  of  the  firm  at  his  own  request,  he  is  not 
entitled  to  compensation  for  his  services  in  the  absence  of 
any  stipulation  to  that  effect,  since  his  duties  as  receiver,  in 
such  case,  are  no  more  than  would  have  been  his  duties  as 
surviving  partner,  for  which  he  would  have  been  entitled 
to  no  compensation,  in  the  absence  of  any  contract  to  that 
effect.2 

§  796.  A  receiver  can  not  recover  judgment  for  his  serv- 
ices against  the  parties  to  the  original  suit  in  which  he  was 
appointed,  by  a  motion  made  in  that  suit,  and  it  is  error  to 
so  enter  judgment  against  them,  there  being  no  action  pend- 
ing in  which  such  a  judgment  is  proper.  The  appropriate 
method  of  procedure  is  to  have  his  compensation  fixed  by 
the  court,  to  be  allowed  out  of  the  assets  in  his  hands,  and 
the  amount  thus  determined  to  be  due  him  may  be  taxed  as 
costs  in  the  action.3  But,  while  the  receiver's  compensation 
is  usually  paid  out  of  the  fund  placed  in  his  hands,  a  differ- 
ent course  may  be  adopted  when  the  order  appointing  the 
receiver  is  revoked,  and  when  he  is  directed  to  return  the 
property  to  the  persons  entitled  thereto.  And  it  is  proper, 
under  such  circumstances,  for  the  court,  in  its  discretion,  to 
require  the  payment  of  part  of  the  compensation  out  of  the 
fund  in  the  receiver's  hands,  and  to  tax  the  balance  as  costs 
against  the  plaintiff,  the  unsuccessful  party  in  the  cause.4 

i  Brien  v.  Harriman,  1  Tenn.  Ch.,  3  Hutchinson  v.  Hampton,  1  Mon- 

467.    See,   also,   Todd    v.   Rich,   2  tana,  39. 

Tenn.  Ch.,  107.  4  French  v.  Gifford,  31  Iowa,  428. 

2  Berry  v.  Jones,  11  Heisk.,  206.  This  was  the  case  of  a  receiver  of  a 


CHAP.  XVIII.] 


COMPENSATION. 


659 


The  court  is  governed,  in  such  case,  by  the  consideration  of 
the  injustice  of  allowing  a  receiver  his  compensation,  in  all 
cases,  from  the  funds  in  his  hands,  regardless  of  the  legality 
of  his  appointment ;  since,  if  such  a  rule  were  to  be  rigor- 
ously applied,  innocent  persons  might  frequently  sustain 
great  loss.1  But  when  no  question  is  made  as  to  the  legal- 
ity or  propriety  of  appointing  the  receiver,  and  he  closes  up 
his  receivership  in  pursuance  of  the  order  appointing  him, 
his  compensation  should  be  paid  from  the  funds  in  his 
hands,  and  no  part  of  it  should  be  taxed  as  costs  against 


savings  bank,  whose  appointment 
had  been  revoked  and  who   had 
been  ordered  to  deliver  back  the 
money  and  assets  received.     The 
court,   Miller,   J.,  say:   "It  is  in- 
sisted by  plaintiff 's  counsel  that  the 
compensation  of  the  receiver  should 
be  paid  out  of  the  fund  of  which 
he  had  the   custody  and  charge, 
and  that  he  should  be  permitted  to 
retain  the  same  therefrom.      Nu- 
merous cases  have  been  cited  to 
show  that  such  is  the  uniform  prac- 
tice.     Upon    an    examination    of 
these  cases  it  will  be  found  that,  in 
every  case,  there  was  no  question 
made  as  to  the  legality  or  propriety 
of  the  appointment  of  the  receiver ; 
that,   in    each    case,   the    receiver 
closed  up  the  business  and  settled 
his  accounts  in  jmrsuance  of  his 
appointment.     The  receivership,  in 
each  case,  was  for  the  benefit  of 
those  interested  in  the  fund,  and 
he  was  paid  therefrom,  which  is 
only  another  method  of  apportion- 
ing the  costs  upon  those  entitled  to 
the  fund.     The    only  case  which 
has  been  brought  to  our  attention, 
in  which  the  order  appointing  the 
receiver  was  set  aside,  is  the  case 
of  Verplanck  v.  The  Mercantile  In- 


surance Co.,  2  Paige,  438,  and  in 
that  case  the  chancellor  ordered 
the  receiver  to  turn  over  all  the 
property,  without  allowing  him 
any  commissions  therefrom.  "We 
think  it  would  be  an  unjust  and 
inequitable  rule  if,  in  all  cases,  the 
receiver  should  be  entitled  to  his 
compensation  from  the  fund  in  his 
hands,  without  reference  to  the 
legality  of  his  appointment.  Un- 
der the  operation  of  such  a  rule, 
innocent  persons  might  be  made  to 
suffer  great  loss.  The  general  rule 
as  to  costs,  both  at  law  and  in 
equity,  is  that  they  shall  be  ad- 
judged to  the  successful,  and 
against  the  unsuccessful,  party. 
Rev.,  §  3449.  And  they  will  be  so 
adjudged,  unless  there  exists  some 
equitable  consideration  to  justify  a 
different  disposition,  or  the  case  is 
otherwise  provided  for  by  law.  In 
cases  like  the  one  under  considera- 
tion, we  may  adjudge  the  costs  to 
one  or  either  of  the  parties,  or  appor- 
tion them."  The  court  accordingly 
directed  that  the  fund  be  charged 
with  one-third  of  the  receiver's 
compensation,  and  the  plaintiff 
with  the  remaining  two-thirds, 
i  French  v.  Gifford,  31  Iowa,  428. 


660 


RECEIVERS. 


[cnAP.  xviii. 


the  plaintiff.1  So  when  a  court  of  equity  takes  property 
under  its  charge  by  appointing  a  receiver,  the  property 
itself  is  chargeable  with  the  necessary  expenses  of  the  re- 
ceivership, including  the  compensation  of  the  receiver.  And, 
in  such  case,  the  person  who,  under  the  final  decree  of  the 
court,  acquires  the  property  or  its  proceeds,  acquires  it  cum 
onere  and  chargeable  with  the  amounts  due  to  the  receiver 
for  services  and  advances.2  But  if  the  appointment  of  the 
receiver  is  for  the  equal  benefit  of  both  parties  to  the  action, 
as  in  a  suit  for  the  settlement  of  partnership  affairs,  the 
receiver's  compensation  should  be  borne  by  both  parties 
equally.3  And  if  the  court  appointing  a  receiver  denies  him 
all  compensation  for  his  services,  he  is  entitled  to  appeal 
from  such  order.4 


1  Radford  v.   Folsom,    55  Iowa,        3  Johnson  v.  Garrett,  23  Minn., 
276.  565. 

2Beckwith  v.  Carroll,  56  Ala.,  12.        4  Herndon  v.  Hurter,  19  Fla.,  397. 


CHAPTER  XIX. 

OF  THE  RECEIVER'S  ACCOUNTS. 

§  797.  Duty  of  receiver  to  account  to  court ;  held  to  great  strictness ; 
consent  of  parties  to  delay ;  required  to  account  without  proc- 
ess of  court ;  not  entitled  to  jury. 

798.  Not  allowed  to  make  expenditures  without  sanction  of  court; 

when  reimbursed;  reward  paid  to  recover  assets;  watching 
property ;  reference  to  master. 

799.  Not  allowed  expenses  for  services  which  he  might  have  per- 

formed himself ;  should  report  facts  to  court. 

800.  Master's  report  on  receiver's  account  and  exceptions  thereto; 

English  rule ;  Irish  practice ;  New  York  rule. 

801.  Distinction  between  master's  report  on  receiver's  account,  and 

on  account  taken  by  himself ;  court  may  investigate  principle 
on  which  account  allowed,  but  not  details ;  exceptions,  when 
taken. 

802.  Not  compelled  to  account  by  stranger ;  nor  to  a  party,  but  only 

to  court ;  party  may  move  for  account ;  duty  to  account  once 
a  year. 

803.  Should  keep  funds  distinct  from  his  own ;  liable  for  interest  on 

mingling  funds. 

804.  General  liability  of  receivers  for  interest  on  funds. 

805.  When  and  to  what  extent  allowed  for  counsel  fees. 

806.  When  allowed  counsel  fees  paid  to  counsel  of  the  parties. 

807.  Receiver  in  suit  against  administrator  not  allowed  for  services 

rendered  as  solicitor  for  the  administrator. 

808.  Not  allowed  counsel  fees  paid  to  himself. 

809.  What  costs  allowed  in  receiver's  accounts. 

810.  When  defendant  in  suit  by  receiver  entitled  to  costs ;  motion  for 

receiver  to  pay  judgment  for  costs. 

811.  When  receiver  allowed  costs  of  unsuccessful  litigation. 

812.  English  practice  as  to  costs. 

813.  When  chargeable  for  hire  of  property;  not  allowed  for  payment 

of  charges  against  predecessor  in  arrears. 

814.  May  account  pending  bill  of  interpleader ;  plaintiff  can  not  have 

receiver  discharged  without  passing  accounts. 

815.  Plaintiff  should  not  be  delayed  by  litigation  concerning  receiver's 

accounts. 


662  RECEIVERS.  [CHAP.  XIX. 

§  816.     Receiver  irregular  in  accounts  ordered  to  present  account  yearly 
and  to  verify  by  affidavit.  j 

817.  Executors  of  receiver  not  compelled  to  pass  his  accounts ;  exec- 

utor denied  petition  for  account  of  payment  into  court. 

818.  When  salary  forfeited  for  delay  in  payment  into  court ;  when 

delay  excusable. 

819.  Receiver  of  minor  compelled  to  account  from  beginning,  on 

minor  coming  of  age. 
819  a.  How  receiver's  accounts  may  be  questioned. 
819  b.  Right  of  appeal  from  order  settling  receiver's  accounts. 

§  797.  Eeceivers  being  officers  of  the  court  appointing 
them,  they  are  required  to  account  to  the  court  for  all  re- 
ceipts and  disbursements  in  the  course  of  their  receivership. 
And  it  is  the  duty  of  a  receiver  to  file  his  accounts  when 
required  hy  the  court,  in  order  that  all  claims  for  compen- 
sation or  disbursements  out  of  the  fund  in  his  hands  may 
be  properly  considered  by  the  court.1  Courts  of  equity  are 
disposed  to  hold  receivers  to  great  strictness  in  rendering 
their  accounts,  and  while  it  would  seem  to  be  competent  for 
a  receiver  to  delay  passing  his  accounts  at  the  required 
time,  by  consent  of  all  parties  in  interest,  when  they  are 
capable  of  giving  consent,  yet  if  some  of  the  parties  are 
minors  he  will  not  be  justified  in  delaying,  even  with  their 
consent.2  And  it  is  held  to  be  the  receiver's  duty  to  come  in 
and  account  to  the  court  at  the  proper  times,  without  any 
process  or  rule  upon  him  for  that  purpose,  and  the  rules 
regulating  proceedings  between  litigant  parties  afford  no 
analogy  to  the  case  of  a  receiver,  the  latter  bemg  an  officer 
of  the  court  and  not  a  party  litigant.3  So  a  receiver  being 
an  officer  of  the  court,  and  the  fund  in  his  hands  being  re- 
garded as  in  the  custody  of  the  court  itself,  he  is  not  enti- 
tled to  a  jury  to  pass  upon  his  accounts.4 

§  793.  A  receiver  will  not  ordinarily  be  permitted  to 
make  any  expenditures  which  will  seriously  diminish  the 

i  Adams  v.  Woods,  8  Cal.,  306.        -'Deaseu.  Reilly,  2  Con.  &  Law., 
See,   also,   Mabry  v.  Harrison,  44    441;  S.  C,  4  Dr.  &  War.,  284. 
Tex.,  286.  3McBride  v.  Clarke,  1  Mol.,  233. 

4  Akers  v.  Veal,  66  Ga.,  302. 


CHAP.  XIX.] 


ACCOUNTS. 


6G3 


fund  entrusted  to  his  charge,  without  the  sanction  and  au- 
thority of  the  court,  and  it  is  his  duty  to  apply  to  the  court 
for  instructions  as  to  expenditures,  and  to  keep  regular  ac- 
counts of  all  items  of  receipts  and  expenditures.  He  can 
not  in  these  matters  act  upon  his  own  discretion,  but  is  held 
to  a  strict  accountability  to  the  court,  and  must  produce 
satisfactory  vouchers  and  proof  for  all  his  charges  against 
the  fund  entrusted  to  his  keeping.1     It  does  not,  however, 


'Hooper  v.  Winston,  24  111.,  353. 
This  was  a  writ  of  error  to  reverse 
a  decree  regulating  the  distribution 
of  the  fund  in  the  hands  of  a  re- 
ceiver over  certain  hotel  property. 
The  general  principles  regulating 
the  disbursements  of  receivers  are 
very  clearly  stated  by  Mr.  Justice 
Breese,  as  follows,  p.  365:  "The 
other  claim  set  up  by  the  receiver, 
to  be  allowed  such  expenses  as  he 
has  chosen  to  set  down,  to  keep 
the  bouse  in  operation,  we  are  con- 
strained to  say  we  see  no  ground 
upon  wliich  to  base  it.  The  re- 
ceiver claims  that  in  this  matter  he 
was  vested  with  a  discretionary 
power,  and  therefore  the  court  had 
no  authority  to  examine  into  the 
mode  or  manner  of  its  exercise; 
that  he  was  merely  the  private 
agent  of  these  parties,  that  whole 
subject  being  left  to  his  own  judg- 
ment. We  do  not  deny  that  he 
had  some  discretion  in  tliis  matter, 
but  it  was  very  limited.  We  hold, 
being  an  officer  of  the  court,  he 
should  have  applied  to  the  court 
for  leave  to  make  these  expendi- 
tures, and  he  is  amenable  to  the 
court  for  the  exercise  of  all  his 
powers.  As  receiver  and  trustee 
for  parties  litigant,  it  was  his  mani- 
fest duty  to  have  kept  regular  ac- 
counts, item  by  item,  of  all  the 
expenses  of  the  house  and  of  the 


receipts  arising  from  it,  and  from 
all  other  sources  from  wliich  money 
might  have  come  into  his  posses- 
sion. He  should  show  an  account 
current  of  the  house,  embracing 
therein  the  stock  he  found  on  hand, 
the  purchases  of  every  description 
for  the  house,  and  the  receipts  of 
the  house.  That  there  were  large 
receipts  is  unquestionable,  yet  no 
account  has  been  rendered  of  any. 
That  a  bar  furnished  with  more 
than  fifteen  hundred  dollars  worth 
of  liquors  should  not,  in  Chicago, 
produce  any  returns,  is  incompre- 
hensible. Failing  to  show  any  ac- 
count current,  every  presumption 
ought  to  be  against  him,  and  for  all 
his  charges  against  the  fund  en- 
trusted to  his  keeping,  he  should 
show  satisfactory  vouchers  and 
proofs.  He  has  shown  none  in  the 
several  reports  he  has  made  to  the 
court.  His  judgment  was  not 
the  Umit  of  the  expenditures,  but 
the  court,  he  being  one  of  its  offi- 
cers, has  a  supervisory  power  over 
his  acts,  and  ho  is  amenable  to  its 
judgment  as  to  the  necessity  of 
these  expenditures,  in  order  to  keep 
the  house  in  operation,  and  he  is 
certainly  accountable  for  the  re- 
ceipts. .  .  In  the  management 
of  the  McCardel  House,  although 
the  receiver  was  required  to  keep 
it  in  operation  until  the   sale,  he 


GGi  EECEIVEES.  [CHAP.  XIX. 

follow  that  in  every  case  ill  which  he  neglects  to  obtain  an 
order  of  court  authorizing  a  particular  payment  out  of  the 
fund  in  his  possession,  he  will  be  denied  reimbursement. 
And  when  a  receiver  of  the  effects  of  a  partnership  is  author- 
ized by  the  court  to  prosecute  suits  for  the  recovery  of  the 
assets,  a  sum  paid  by  him  as  a  reward  for  the  recovery  of 
lost  books  of  the  partnership  has  been  regarded  as  a  neces- 
sary and  appropriate  expenditure,  in  the  prosecution  of  suits 
for  the  protection  of  creditors,  and  has  been  allowed  in  his 
accounts.1  So  when  a  receiver  finds  the  property  insured 
and  continues  such  insurance,  the  court,  in  passing  his  ac- 
counts, may  allow  such  insurance,  if  paid  in  good  faith  and 
if  necessary  for  the  protection  of  the  propert}^,  even  though 
such  expenditure  had  not  been  authorized  b}T  any  order  of 
the  court.2  And  a  receiver  is  entitled  to  charge  in  his 
account  for  the  necessary  watching  of  the  property  in  his 
custody.3  Under  the  English  chancery  practice,  when  a  re- 
ceiver had  laid  out  money  without  a  previous  order  of  court 
for  that  purpose,  the  matter  was  referred  to  a  master  to 
examine  whether  the  transaction  was  beneficial  to  the  par- 
ties in  interest,  and  if  found  to  be  so,  the  receiver  was  allowed 
the  amount  thus  expended.4 

§  799.  It  may  be  said  generally,  that  a  court,  in  passing 
upon  the  accounts  of  its  receiver,  will  not  ratify  any  expend- 
iture which  has  not  been  necessarily  incurred  for  the  benefit 
of  the  estate  committed  to  his  charge.  And  when  a  receiver 
has  stepped  outside  the  order  of  his  appointment  and  as- 
sumed the  role  of  actor,  and  has  incurred  large  and  un war- 


had,    as  an  officer  of  the    court,  pose    the    expenditure    may  have 

but  very  little  discretion  allowed  been  desired.     No  single  act  calcu- 

him,  and  should  have  applied  to  lated    to    diminish    seriously    the 

the  court,  by  a  brief  petition,  set-  fund  could  the  receiver  do  on  his 

ting  out  the  facts  and  asking  for  own  mere  motion,  and  in  the  exer- 

a  reference,  whether  such  and  such  cise  of  his  discretion." 
expenditures  would  be  for  the  bene-        1  Adams  v.  Woods,  15  Cal.,  206. 
fit  of  the  interested  parties,  and        2  Brown  u.  Hazlehurst,  54  Md.,  26. 
necessary  to  keep  the  house  in  oper-        3  Howes  v.  Davis,  4  Ab.  Pr.,  71. 
ation,  or  for  whatever  other  pur-        4  Tempest  v.  Ord,  2  Meriv.,  55. 


CHAP.   XIX.] 


ACCOUNTS. 


665 


ranted  expenses  for  services  which  he  might  properly  have 
performed  himself,  and  has  done  this  without  the  consent  of 
or  notice  to  either  of  the  parties  to  the  action  or  to  the 
court,  he  will  not  be  allowed  such  expenses.1  So  when  he 
has,  without  authority  from  the  court,  appointed  a  deputy 
receiver  to  perform  duties  which  he  himself  might  and  should 
have  performed,  he  will  not,  in  passing  his  accounts,  be  al- 
lowed the  compensation  paid  to  such  deputy.2  When  the 
receiver  has  paid  no  money  for  particular  services,  but  has 
arranged  with  the  person  performing  such  services  that  he 
shall  receive  such  compensation  as  the  court  may  allow,  the 
facts  should  be  so  reported  by  the  receiver  in  his  account, 
and  parties  in  interest  who  are  dissatisfied  with  the  account, 
in  whole  or  in  part,  may  appeal  from  the  final  order  of  the 
court  thereon.3 

§  800.     Under  the  practice  of  the  English  Court  of  Chan- 


1  Corey  v.  Long,   43  How.   Pr., 
504. 

2 Corey  v.   Long,   43  How.   Pr., 
504. 

3  Adams  v.  Woods,  8  Cal.,  306. 
"It  is  the  duty  of  the  receiver," 
says  Mr.  Justice  Burnett,  p.  316,  "  to 
file  his  accounts  when  required  by 
the  court,  and  if  he  fail  in  this,  the 
court,  upon  application  of  a  party 
in  interest,  or  upon  its  own  motion, 
will  compel  him  to  do  so.  When 
his  account  is  filed,  all  claims 
against  the  fund  for  disbursements 
or  engagements  made  by  the  re- 
ceiver would  properly  come  before 
the  court  for  consideration.  When 
the  receiver  has  paid  no  money,  but 
has  made  an  arrangement  with  a 
party  to  receive  such  compensation 
as  the  court  may  allow,  he  should 
report  the  facts,  leaving  a  blank 
for  the  sum  that  may  be  allowed. 
If  any  of  the  parties  employed  by 
the  receiver  should  not  be  satisfied 
with  the  account,  in  whole  or  in 


part,  they  could  then  make  their 
objections.  And  if  any  one  or 
more  of  them  should  feel  aggrieved 
by  the  final  order  of  the  court,  they 
should  all  appeal,  and  all  the  ques- 
tions should  come  up  before  this 
court  in  one  case.  However  ex* 
tensive  the  record  and  numerous 
the  parties  might  be,  the  labor  of 
this  court  and  expense  to  the  par- 
ties would  not  in  this  way  be  in- 
creased but  diminished.  But  if  a 
separate  reference  and  separate  ap- 
peal were  allowed  in  regard  to  each 
separate  claim  upon  the  fund,  then 
the  proceedings  would  be  greatly 
prolonged,  to  the  injury  of  all  par- 
ties. And  when  the  appeal  should 
be  taken,  it  would  only  be  necessary 
for  the  court  below  to  order  the  re- 
ceiver to  retain  so  much  of  the 
fund  in  his  hands  as  might  be  nec- 
essary to  pay  the  disputed  items, 
if  finally  allowed,  and  order  the 
distribution  of  the  remainder." 


6QQ  RECEIVERS.  [CHAP.  XIX. 

eery,  a  master's  report  upon  a  receiver's  account  did  not  re- 
quire confirmation  by  tlie  court,  and  did  not,  therefore, 
admit  of  exceptions.  And  the  court  would  not  enter  into  a 
consideration  of  any  particular  items  of  the  account,  but 
would,  upon  the  petition  of  any  person  aggrieved,  examine 
any  principle  upon  which  the  master  had  proceeded  which 
was  alleged  to  be  erroneous.1  Under  the  Irish  chancery 
practice,  however,  a  more  liberal  rule  prevails  and  the  court 
will  investigate  the  items  of  the  receiver's  account.2  The 
English  rule  prevailed  under  the  New  York  chancery  sys- 
tem, and  when  a  reference  was  had  to  a  master  for  the 
purpose  of  settling  the  receiver's  accounts,  no  order  of  con- 
firmation of  the  master's  report  was  required,  nor  were  ex- 
ceptions allowed  to  such  report.  And  if  a  party  in  interest 
was  dissatisfied  with  the  allowance  made  by  the  master,  his 
proper  course  was  to  apply  to  the  court  to  review  the 
account  in  such  particulars  as  were  objectionable,  and  the 
court  would  then  consider  objections  as  to  the  general  prin- 
ciples on  which  the  master  had  proceeded  in  taking  the 
receiver's  accounts,  but  would  not  take  cognizance  of  objec- 
tions to  particular  items.3 

§  801.  A  distinction  is  recognized  between  a  master's  re- 
port upon  a  receiver's  account,  and  his  report  containing  an 
account  taken  and  stated  by  himself,  or  a  report  upon  a  mat- 
ter referred  to  him  for  investigation.  The  distinction  is  based 
upon  the  fact  that  the  receiver  is  himself  an  officer  of  the 
court,  as  well  as  the  master,  and  that  he  states  his  own  ac- 
count and  submits  it  to  the  master  for  inspection  under  order 
of  the  court,  the  master  acting  in  place  of  the  court,  and  in  a 
judicial  rather  than  a  ministerial  capacity.  If  the  master 
adopts  any  erroneous  principle  in  allowing  the  receiver's 

1  Shewell  v.  Jones,  2  Sim.  &  St.,  ing  exceptions  to  receiver's  ac- 
170,  affirmed  3  Russ.,  522.  counts,  and  the  time  and  manner 

2  Beytagh  v.  Concannon,  10  Ir.  of  presenting  such  exceptions,  Me- 
Eq.,  351.  chanics    Bank  of   Philadelphia  V. 

3Browerv.  Brower,  2  Edw.  Ch.,  Bank  of  New  Brunswick,  2  Green 
621.  And  see,  as  to  the  practice  in  Ch.,  437;  Richards  v.  Morris  Canal 
New  Jersey  in  regard  to  entertain-    &  Banking  Co.,  3  Green  Ch.,  428. 


CHAP.  XIX.]  ACCOUNTS.  6G7 

accounts,  the  court,  on  petition  of  the  proper  parties,  may 
refer  the  matter  back  to  him  for  correction.  And  in  deter- 
mining such  question  the  court  will  investigate  the  princi- 
ples and  rules  adopted  by  the  master  in  allowing  the 
receiver's  accounts,  without  examining  the  items  in  detail,  or 
the  evidence  on  which  they  rest,  the  latter  duty  being  more 
especially  within  the  province  of  the  master,  and  being  anal- 
ogous to  the  province  of  a  jury  on  questions  of  fact.  If 
it  is  desired  to  take  exceptions  to  the  master's  report  upon 
the  receiver's  accounts,  they  should  be  first  taken  before 
the  master;  otherwise  they  will  not  be  considered  by  the 
court.  The  object  of  the  rule  is  twofold,  being  to  afford 
the  master  an  opportunity  to  reconsider  his  decision,  and  to 
enable  the  receiver  to  sustain  his  accounts  by  additional 
evidence,  or  to  make  such  explanation  as  the  case  may  re- 
quire. And  while  the  rule  would  not  deter  the  court  from 
directing  an  account  to  be  reformed,  if  it  contained  manifest 
errors  or  improper  charges,  yet  such  errors  should  be  clearly 
shown  to  exist,  and  their  character  should  be  such  as  to  be 
shown  by  the  proofs  in  the  case,  or  by  their  intrinsic  nature.1 
But  a  receiver  is  not  entitled  to  an  order  of  reference  to  ex- 
amine and  pass  upon  his  accounts  until  he  has  presented  a 
full  and  definite  statement,  itemizing  the  various  matters, 
and  verifying  the  account  under  oath.2 

§  802.  A  court  of  equity  will  not  ordinarily  entertain  an 
application  from  a  stranger  to  the  cause  to  have  the  receiver 
pass  his  account,  when  no  special  ground  is  shown  for  such 
order.3  And  a  receiver  can  not  be  compelled,  pending  liti- 
gation, to  account  to  a  party  to  the  suit,  or  to  furnish  him 
with  statements  of  the  condition  of  his  accounts.  Being 
an  officer  of  the  court  and  not  of  the  parties  litigant,  he  is 

1  Cowdrey  v.  The  Railroad  Com-  2  People  v.  Columbia  Car  Spring 

pany,  1  Woods,  331.     And  see  this  Co.,  12  Hun,  585. 

case  as  to  principles  governing  the  3Colburn  v.   Cooper,   8  Ir.  Eq., 

court  in  allowing  a  receiver's  ac-  510. 
counts    for    expenses    incurred  in 
operating  a  railway. 


COS  RECEIVERS.  [CHAP.  XIX. 

only  required  to  account  to  the  court  from  which  he  derives 
his  appointment.1  But  when  the  receiver  in  a  cause  has 
never  made  a  full  or  complete  report  of  the  income  and 
disbursements  of  the  estate  committed  to  his  care,  any 
party  to  the  cause  may  move  for  such  an  account ;  and  it  is 
the  duty  of  the  receiver  himself,  as  an  officer  of  the  court, 
to  make  a  full  report  and  to  pass  his  accounts  at  least  once 
a  year,  since  in  no  other  way  can  the  parties  to  the  cause  be 
informed  as  to  their  rights  or  the  court  act  understandingly.- 
§  803.  In  the  absence  of  any  special  directions  of  the 
court,  it  is  the  duty  of  a  receiver  to  keep  the  fund  entrusted 
to  him  entirely  separate  and  distinct  from  his  individual 
funds.  If  he  deposits  the  money  in  bank  for  safe  keeping, 
it  should  be  deposited  to  a  separate  account  in  his  name  as 
receiver,  so  that  the  fund  may  at  all  times  be  traced  and 
identified.3  And  when,  in  disregard  of  this  duty,  the  receiver 
violates  his  trust  by  mixing  the  trust  fund  with  his  own 
money,  keeping  the  whole  in  one  common  bank  account  in 
his  own  name,  and  using  large  sums  as  temporary  loans 
from  time  to  time,  he  is  guilty  of  such  a  breach  of  trust  as 
to  render  himself  liable  for  interest  upon  the  fund.  And 
such  interest  will  be  charged  him  in  the  final  settlement  of 
his  accounts,  regardless  of  whether  he  himself  derived 
profit  from  the  fund  or  interest  from  the  loans.4  So  when 
he  withdraws  funds  from  his  account  as  receiver  and  de- 
posits them  in  another  bank  to  his  private  account,  and  in 
the  settlement  of  his  accounts  he  declines  to  explain  the 
matter,  or  to  state  what  sums  he  has  thus  deposited  to  his 
individual  account,  he  is  properly  chargeable  with  interest.5 

i  Musgrove  u.  Nash,  3  Eiw.  Ch.,  3Utica  Insurance  Co.  v.  Lynch, 

172.  11  Paige,  520;  Hinckley  v.  Eailroad 

2 Lowe  v.   Lowe,    1    Term.   Ch.,  Co.,  100  IT.  S.,  153;  In  re  Common- 

515;  Stretch  v.  Gowdey,   3  Tenn.  wealth  Fire  Insurance  Co.,  32  Hun, 

Ch.,  565.     And  see,  as  to  the  rules  78. 

and  orders  of    the    English  High  4Utica  Insurance  Co.  v.  Lynch, 

Court  of  Chancery  upon  the  sub-  11  Paige,  520. 

ject,    the    opinion    of    Chancellor  5 Hinckley  v.  Railroad   Co.,   100 

Cooper  in  this  case.  U.  S.,  153. 


CHAP.  XIX.]  ACCOUNTS. 


GOO 


So,  too,  if  he  deposits  the  funds  of  his  receivership  in  bank 
with  his  personal  funds  in  his  private  account,  against  which 
he  draws  his  individual  checks  from  time  to  time,  thereby 
deriving  individual  benefit  from  the  funds  of  the  receiver- 
ship, he  may  be  charged  with  interest.1  But  the  fact  that 
the  receiver  has  deposited  the  funds  of  his  receivership  with 
his  own  private  funds  in  bank  will  not  render  him  liable  to 
pay  interest  thereon,  when  it  is  not  shown  that  he  has  used 
any  part  of  the  funds  pertaining  to  the  receivership,  or  in 
any  manner  acquired  any  profit  therefrom.2 

§  804.  In  general  it  may  be  said  that  receivers  will  not 
be  allowed  to  make  interest  for  their  own  benefit  upon 
funds  in  their  hands,  and  will  be  answerable  for  interest 
upon  their  balances.2  And  a  receiver  is  chargeable  with  in- 
terest upon  funds  derived  from  a  sale  of  property,  either 
when  he  receives  interest  or  when  he  might  have  done  so.4 
If  he  retains  funds  in  his  hands  after  the  time  when  they 
should  be  paid  over,  he  may  be  required  to  pay  interest 
thereon  'at  the  time  of  rendering  his  next  account.5  And 
when  he  is  guilty  of  negligence  in  not  passing  his  accounts 
at  the  time  required,  he  will  be  compelled  to  pay  interest 
upon  the  balance  in  his  hands  from  the  time  when  it  was 
his  duty  to  account,  or  to  pay  the  money  into  court.6  He 
will  not  usually  be  required,  however,  to  pay  interest  from 
the  very  moment  of  receiving  the  money,  but  only  from  the 
time  when  it  should  have  been  paid  into  court.7  But  in  the 
interval  between  receiving  the  money  and  the  time  of  pass- 
ing- his  accounts,  he  can  not  make  interest  on  the  fund  for 
his  own  benefit,  and  if  he  receives  a  sufficient  sum  to  be  in- 
vested, he  should  apply  for  an  order  to  have  it  paid  into 

i  In  re  Commonwealth  Fire  In-  4  Hooper  v.  Winston,  24  111.,  353. 
surance  Co.,  32  Hun,  78.  sHarman    v.    Forster,    1    Hog., 

2  Radford  v.   Folsom,   55    Iowa,     318. 

276.  6  Fletcher  v.  Dodd,  1  Ves.  Jun., 

3  Lonsdale  v.   Church,  3  Bro.  C.    85;  v.  Jolland,   8  Ves.,  72; 

C,  41;  Shaw  v.   Rhodes,  2  Russ.,  Potts  v.  Leighton,  15  Ves.,  273. 

539.  '  Potts  v.  Leighton,  15  Ves.,  273. 


670  RECEIVERS.  [CHAP.  XIX. 

court,  in  order  that  it  may  be  made  productive  to  the  estate.1 
When  receivers  have  illegally  appropriated  a  balance  in 
their  hands  they  are  chargeable  with  interest  on  such  bal- 
ance, and  if  one  of  them  has  made  the  misappropriation 
and  the  other  has  negligently  permitted  it,  they  will  be  held 
jointly  liable  therefor  in  the  final  settlement  of  their  ac- 
counts.2 And  when  a  receiver  had  retained  the  funds  in  his 
hands  for  a  long  period  for  his  own  benefit,  he  was  charged 
interest  on  his  yearly  balances,  and  the  interest  was  com- 
puted by  annual  rests,  that  is  upon  the  balance  in  his  hands 
at  the  end  of  each  year.3  So  if  a  receiver,  acting  in  good 
faith,  but  without  the  direction  or  authority  of  the  court, 
loans  the  funds  belonging  to  his  receivership,  and  charges 
himself  with  the  amounts  received  for  interest,  no  losses 
occurring  by  reason  of  such  loans  and  the  estate  being 
benefited  thereby,  he  should  not  be  charged  with  interest 
beyond  the  amount  actually  received  by  him.4  But  it  is 
improper  to  require  a  receiver  to  pay  interest  upon  the 
money  in  his  hands  in  the  absence  of  any  evidence  upon 
the  question  of  his  liability  to  pay  such  interest.5  And 
while  a  receiver  is  not  allowed  to  make  any  personal  profit 
out  of  his  office,  aside  from  his  compensation,  yet  the  rule 
will  not  be  extended  to  require  him  to  account  for  money 
which  he  has  realized,  not  by  any  act  done  or  omitted  as 
receiver,  but  by  reason  of  the  opportunity  afforded  by  his 
receivership.  Thus,  a  receiver,  who  had  been  engaged  in 
business  as  a  broker  before  his  appointment,  and  who  while 

1  Shaw  v.  Rhodes,  2  Russ.,  539.        should  be  required  to  pay  interest 

2  Commonwealth  v.   Eagle    Fire    on  their  balances  at  the  rate  of  five 
Insurance  Co.,  14  Allen,  344.  per  cent,  per  annum.     See  General 

3 Foster  v.  Foster,  2  Bro.  C.  C,  Order,  15  Ves.,  278.     And  see  com- 

616.     In  1796  a  general  order  was  ments  thereon  by  Lord  Eldon  in 

entered  by  the  English  Court  of  Potts  v.  Leigh  ton,  id.,  273. 

Chancery,    requiring    receivers  to  4  Attorney-General      v.       North 

pass  their  accounts  and  pay  the  America  Life  Ins.  Co.,  89  N.  Y., 

balances  in  their  hands  into  court  94,   affirming     in    part    S.   C,   26 

annually,    and    that     in     default  Hun,  294. 

thereof  their  salary  or  compensa-  5  How  v.  Jones,  60  Iowa,  70. 
tion  should  be  disallowed,  and  they 


CHAP.  XIX.]  ACCOUNTS.  GTl 

acting  as  receiver  of  an  insolvent  bank  is  paid  by  mortgage 
debtors  of  the  bank  a  commission  for  procuring  new  loans 
with  which  to  pay  their  indebtedness  to  the  bank,  will  not 
be  required  to  account  for  such  commissions  when  he  has 
acted  in  good  faith  and  without  neglecting  his  duties  as 
receiver.1 

§  805.  Receivers  are  entitled,  in  the  settlement  of  their 
accounts,  to  payments  made  on  account  of  legal  services  and 
counsel  fees.2  And  such  fees,  when  paid  by  the  receiver  in 
good  faith  in  collecting  moneys  to  which  he  is  entitled,  the 
disbursements  being  necessary  and  beneficial  to  the  parties 
ultimately  entitled  to  the  fund,  should  be  paid  from  such 
fund  in  the  settlement  of  the  receiver's  accounts.3  But  ex 
parte  orders  for  the  payment  of  fees  to  the  counsel  for  the 
receiver,  who  is  his  law  partner,  such  orders  being  obtained 
by  the  receiver  or  by  the  counsel  himself  without  notice  to 
the  parties  in  interest,  are  not  conclusive  upon  a  reference 
to  settle  the  receiver's  accounts,  and  he  will  still  be  required 
to  show  that  such  payments  were  justified  by  services  ren- 
dered.4 And  upon  a  petition  by  the  attorney  for  the  re- 
ceiver for  an  allowance  for  his  services,  the  court  should  not 
allow  more  than  the  amount  claimed  in  the  petition,  although 
there  may  be  testimony  in  the  case  which  would  warrant  a 
larger  allowance.5  And  the  courts  are  usually  indisposed  to 
allow  a  receiver  any  payments  made  to  counsel  for  services 
when  the  employment  has  not  been  authorized  by  the  court.6 

Special  Bank  Commissioners  v.  ance  Co.,  27  Hun,  195;  Attorney- 
Franklin  Institution,  11   R.  I.,  557.  General      v.       Continental      Life 

2  Howes  v.  Davis,  4  Ab.  Pr.,  71.  Insurance  Co.,  31  Hun,  623.     As  to 

3  How  v.  Jones,  60  Iowa,  70.  the  practice  in  fixing  the  amount 

4  In  re  Commonwealth  Fire  In-  of  counsel  fees  for  services  rendered 
surance  Co.,  32  Hun,  78.  As  to  a  receiver  of  an  insolvent  life  insur- 
allowances  for  counsel  fees  out  of  ance  company  under  the  statutes 
the  funds  of  the  receivership  to  of  New  York,  see  People  v.  Knick- 
claimants  against  such  funds,  and  erbocker  Life  Insurance  Co.,  31 
to  intervening  creditors,  see  People  Hun,  622. 

v.  Security  Life  Insurance  and  An-        5  Richter  v.   Schroeder,  110   HI., 

nuity  Co.,  23  Hun,  596;  Attorney-     112. 

General  v.  Continental  Life  Insur-        6  Corey  v.  Long,  43  How.  Pr.,  504. 


072  KECEIVERS.  [cnAP.  XIX. 

And  a  receiver  is  not  entitled,  on  settlement  of  bis  accounts, 
to  an  allowance  for  counsel  fees  paid  by  him  out  of  a  par- 
ticular fund,  in  an  unsuccessful  defense  of  an  action  brought 
against  bim  by  a  person  entitled  to  that  fund,  and  in  an  ap- 
peal taken  in  such  action;  especially  when  the  original  action 
is  brought  against  him  and  the  appeal  is  prosecuted  by  him 
in  his  personal  capacity,  and  not  as  receiver.1  And  when 
a  person,  not  in  interest  in  the  controversy,  has  fraudulently 
procured  his  own  appointment  as  receiver  of  a  fund  in  liti- 
gation, and  has  obtained  possession  of  the  fund,  in  opposi- 
tion to  the  wishes  and  under  protest  of  all  the  parties  in 
interest  and  of  all  parties  to  the  cause,  he  will  not  be  allowed 
to  charge  upon  the  fund  payments  made  to  counsel  employed 
by  him  in  defending  his  appointment,  the  order  being  re- 
versed on  appeal.2  ]STor  will  counsel  fees  be  allowed  for 
services  rendered  in  resisting  an  applicatiou  for  the  removal 
of  a  receiver,  when  the  application  is  sustained.3  But  the 
receiver's  expenses  and  fees  for  counsel  and  witnesses,  in 
defending  himself  against  a  motion  for  his  removal,  have 
been  allowed  him  when  the  court  was  satisfied  that  he  had 
acted  with  entire  good  faith  and  strict  integrity ;  and  when 
the  charges  against  him  have  been  withdrawn  by  an  amica- 
ble arrangement  between  the  parties,  and  when  he  has  then 
voluntarily  surrendered  his  trust  to  the  court.4  And  a  re- 
ceiver of  a  lunatic's  estate  may  be  allowed  proper  and  rea- 
sonable counsel  fees,  for  advice  and  assistance  rendered  him 
in  the  discharge  of  his  official  duty,  and  in  aiding  him  to 
protect  the  estate.5 

§  806.  The  courts  have  usually  been  averse  to  allowing 
a  receiver  to  employ  as  his  counsel  the  counsel  of  either 
party  to  the  cause,  when  there  are  conflicting  interests. 
And  when  counsel  for  the  plaintiff,  in  an  action  for  the  dis- 

i  Utica  Insurance  Co.  v.  Lynch,  3In  re  Colvin,  4  Md.  Ch.,  126. 

2  Barb.  Ch.,  573.  4('owdrey  v.  The   Railroad  Co., 

2  O'Mahoney  v.  Belmont,  62  N.  1  Woods,  331. 

Y.,  133,  affirming  S.  C,  37  N.  Y.  *>Inre  Colvin,  4Md.  Ch.?  126. 
Supr.  a.  R.,  223. 


CHAP.  XIX.]  ACCOUNTS.  673 

solution  of  a  partnership,  had  also  acted  as  associate  counsel 
to  the  receiver,  the  court  refused  to  allow  a  claim  for  com- 
pensation for  such  services.1  But  where  the  counsel  of  one 
of  the  parties  has  been  employed  by  the  receiver,  not  ad- 
versely to  either  of  the  parties,  but  to  advance  the  common 
interest  of  both,  such  employment  does  not  fall  within  the 
principle  of  the  rule  prohibiting  the  receiver  from  employ- 
ing the  counsel  of  either  party.  In  such  case,  therefore,  it 
is  proper  to  allow  the  receiver,  in  passing  his  accounts  a 
reasonable  sum  for  counsel  fees.2  But  in  the  settlement  of 
his  accounts,  a  receiver  has  no  authority  to  credit  himself 
with  counsel  fees  paid  for  or  in  behalf  of  either  of  the 
parties  to  the  cause.  If,  however,  upon  final  settlement, 
sufficient  funds  remain  belonging  to  the  parties  for  whom 
he  has  made  such  advances,  he  may  be  reimbursed  out  of 
such  funds  if  the  amounts  so  advanced  were  reasonable  and 
proper,  or  made  at  the  request  of  the  party  charged.3 

§  807.  When  a  receiver  is  appointed  in  a  suit  in  chancery 
against  an  administrator  to  recover  property  of  the  de- 
ceased, he  will  not  be  allowed  to  credit  himself  in  his 
account  with  an  amount  due  him  for  services  which  he  has 
rendered  as  solicitor  for  the  administrator  in  defending 
the  suit,  since  this  is  properly  a  claim  against  the  admin- 
istrator, which  should  be  allowed  by  the  court  of  pro- 
bate.4 

§  808.  A  receiver,  in  stating  his  accounts,  will  not  be 
allowed  to  charge  for  counsel  fees  paid  to  himself  for  serv- 
ices rendered,  he  being  an  attorney,  in  addition  to  the  legal 
costs  properly  taxable  in  suits  prosecuted  or  defended  by 
him.  And  it  is  deemed  as  unsafe  to  permit  a  receiver  to 
contract  with  and  to  pay  himself  for  such  extra  services,  as 
it  would  be  to  permit  him  to  become  a  purchaser  of  the 

i  Adams  v.   Woods,   8  Cal.,  306.  673.     See  Ryckman  v.   Parkins,  5 

And    see    Bennett    v.    Chapin,    3  Paige,  543. 

Sandf.,  673.  3  Drake  v.  Thyng,  37  Ark.,  228. 

2 Bennett  v.    Chapin,  3    Sandf.,  4  Battaile  r.  Fisher,  36  Miss.,  321. 
43 


674  RECEIVERS.  [CHAP.  XIX. 

trust  property,  which  it  is  his  duty  to  sell  to  the  best  ad- 
vantage of  the  estate.1 

§  809.  The  costs  of  the  appointment  of  a  receiver  are 
entitled  to  priority  of  payment  out  of  a  fund  realized  by 
him,  before  all  other  demands.2  If,  however,  a  receiver 
permits  costs  to  accrue  which  he  ought  to  have  prevented, 
as  if  he  neglects  to  pay  rent  due  to  the  landlord  upon 
premises  subject  to  the  receivership,  he  will  be  required  to 
pay  such  costs  out  of  his  own  pocket.3  But  a  receiver  who 
is  discharged  because  of  his  inability  to  procure  new  sure- 
ties, will  not  be  charged  with  the  costs  of  appointing  a  new 
receiver.4  And  when  it  does  not  appear  that  a  receiver  has 
been  guilty  of  any  fraud  or  bad  faith  in  his  accounts,  the 
costs  of  a  reference  for  their  settlement  should  not  be 
charged  against  him,  even  though  some  items  in  his  accounts 
are  not  allowed.5 

§  810.  In  an  action  prosecuted  by  the  receiver  of  a  cor- 
poration for  the  collection  of  money  demands,  where  the 
action  is  carried  on  for  the  enhancement  of  the  fund  in  the 
receiver's  hands,  for  the  benefit  of  those  who  shall  be  finally 
determined  to  be  entitled  thereto,  if  the  receiver  is  unsuc- 
cessful in  his  suit,  the  defendant  is  entitled  to  costs.  And 
such  defendant  will  not  be  required  to  await  the  final  dis- 
tribution of  the  assets  and  to  share  jwo  rata  with  other 
creditors  or  parties  interested,  but  he  is  entitled  to  an  imme- 
diate order  for  payment  of  the  costs  out  of  any  funds  in 
the  receiver's  hands.6    But  it  has  been  held  to  constitute  no 


1  In  re  Bank  of  Niagara,  6  Paige,  was  an  ordinary  suit  at  law  by  the 
213.  receivers    for    the    recovery  of    a 

2  Read  v.  Corcoran,  1  Ir.  Ch.,  N.  money  demand.     Defendants  had 
S.,  235.  judgment  for  their  costs  of  suit, 

3  Cook  v.  Sharman,  8  Ir.  Eq.,  515.  and  applied  by  motion  for  an  order 
4 Lane   v.  Townsend,  2  Ir.   Ch.,  that  the  receiver  pay  such  costs 

N.  S.,  120.  out  of  funds  in  his  hands.     Wood- 

5  Radford  v.  Folsom,  55  Iowa,  276.  ruff,  J. ,  says,  p.  537 :  "  In  an  action 

6  Columbian  Insurance  Co.  v.  Ste-  prosecuted  by  receivers  for  the  col- 
vens,   37  N.   Y.,  536.     The  action  lection  of  alleged  money  demands, 


ciiai\  xix.] 


ACCOUNTS. 


07.") 


ground  for  sustaining  a  motion  to  require  a  receiver  to  pay 
a  judgment  for  costs,  that  he  has  recently  been  in  possession 
of  funds  sufficient  to  pay  the  judgment,  or  that  he  has  paid 
other  and  larger  demands,  since  the  receiver  is  not  bound 
to  render  a  general  account  of  his  trust  to  each  creditor 
who  may  assail  him  with  such  a  motion.1 

§  811.  Under  the  English  chancery  practice,  it  was  held 
that  while  a  receiver  could  not  be  allowed  his  costs  and  ex- 
penses in  defending  actions  without  leave  of  court,  if  he 
failed  in  the  defense,  yet  if  he  was  successful  he  was  enti- 
tled to  his  costs,  although  he  had  defended  without  the 
sanction  of  the  court.2  But  a  receiver  of  an  infant's  estate 
will  not  be  allowed  his  costs  and  expenses  incurred  in  de- 
fending actions  without  the  sanction  of  the  court,  since  it 


instituted  or  carried  on  for  the  en- 
hancement of  the  fund,  for  the 
benefit  of  those  to  whom  it  is  ulti- 
mately to  be  paid,  is  the  defendant 
entitled  to  costs  to  be  paid  to  him 
immediately,  or  must  he  stand  as 
a  general  creditor  to  await  the  final 
administration  and  receive  only  (as 
the  case  may  be)  his  distributive 
share  of  the  fund  pro  rata,  with 
those  for  whose  benefit  he  has  been 
subjected  to  a  groundless  litiga- 
tion? .  .  It  was  conceded  on  the 
argument  that  the  costs  in  ques- 
tion are  chargeable  upon  and  are 
to  be  collected  out  of  the  fund. 
This  could  not  well  be  denied,  and 
yet,  in  a  case  in  which  it  does  not 
appear  by  anything  stated  in  the 
papers  that  there  are  other  claims 
on  that  fund,  of  any  sort,  except 
the  interests  of  the  stockholders  of 
the  company,  it  would  seem  to  fol- 
low, as  of  course,  that  the  receiver 
should  have  been  directed  to  pay 
those  costs.  Such  an  order  is  the 
appropriate  mode  of  reaching 
tunds  in  the  receiver's  hands.    Not 


being  in  form  a  party  to  the  action, 
no  execution  could  reach  the  prop- 
erty he  holds,  and  being  the  custo- 
dian of  the  fund  as  an  officer  of 
the  court,  he  is  subject  to  immedi- 
ate direction  to  pay  it  to  a  party 
entitled.  .  .  The  receiver  is,  pro 
hac  vice,  the  representative  of  the 
company,  its  creditors  and  stock- 
holders. The  action  is  prosecuted 
for  the  increase  of  a  fund  which 
is  to  be  paid  to  them.  It  is  not  ac- 
cording to  any  rule  of  justice  or 
equity  toward  third  parties  that 
actions  like  the  present  should  be 
prosecuted  by  the  company  or  such 
representative,  otherwise  than  at 
the  expense  and  risk  of  the  fund 
which  it  is  sought  thereby  to  in- 
crease," 

1  Devendorf  v.  Dickinson,  21 
How.  Pr.,  275.  See,  as  to  liability 
of  receivers  for  costs  under  the 
New  York  code  of  procedure, 
Marsh  v.  Hussey,  4  Bosw.,  614. 

2Bristowe  v.  Needham,  2  Ph., 
190. 


076  RECEIVERS.  [CHAP.  XIX. 

is  improper  for  him  to  incur  any  expense  to  the  estate  with- 
out leave  of  court.1  And  when  a  receiver  has  improvi- 
dent!)7 instituted  proceedings  at  law  in  a  certain  form  of 
action,  which  he  has  afterward  abandoned  under  the  advice 
of  counsel,  and  has  brought  his  action  in  another  form,  in 
which  he  is  successful,  it  would  seem  that  he  can  not  be 
allowed  the  costs  of  the  former  proceeding,  but  must  bear 
them  himself.2  Where,  however,  an  application  was  made 
and  proceedings  were  had  against  a  receiver,  but  the  appli- 
cation was  refused  with  costs,  which  the  applicant  was 
wholly  unable  to  pay,  the  receiver  was  allowed  his  costs,  as 
between  solicitor  and  client,  out  of  the  fund  in  his  hands.3 

§  812.  Under  the  English  chancery  practice,  a  receiver 
was  'not  allowed  his  costs  for  appearing  in  response  to  a 
petition  for  his  final  discharge,  since  he  need  not  have  ap- 
peared, being  merely  an  officer  of  the  court,  and  not  a  party 
interested.4  And  a  receiver  was  not  usually  allowed  to  take 
any  steps,  by  petition  or  otherwise,  for  the  satisfaction  of 
his  costs  and  expenses,  this  being  left  to  the  action  of  the 
parties  to  the  cause.  If,  however,  the  parties  had  been 
guilty  of  long-continued  negligence  and  delay  in  moving 
for  the  taxation  and  payment  of  the  receiver's  costs,  he 
was  held  justified  in  presenting  a  petition  himself  for  their 
allowance  and  payment.5 

§  813.  When  a  receiver  has  used  property  entrusted  to  his 
care  in  and  about  his  private  business,  thereby  deriving 
profit  to  himself,  he  is  properly  chargeable  in  his  account 
for  the  hire  of  the  property.6  But  he  will  not  be  allowed 
to  charge  in  his  account  for  money  advanced  by  him  in 
payment  of  charges  against  his  predecessor  in  office,  who 
was  largely  in  arrears  on  account  of  the  funds  entrusted  to 

i  Swaby  v.  Dickon,  5  Sim.,  629.  "Battaile  v.  Fisher,  36  Miss.,  321. 

2  In  re  Montgomery,  1  Mol.,  419.  And  see  as  to  liability  of  a  receiver 

3Courand  v.  Hanmer,  9  Beav.,  3.  of   rents  and  profits  to    account, 

*  Herman  v.  Dunbar,  23  Beav.,  when  he  has  been  appointed   by 

312.  agreement  of  the  parties,  Ford  v. 

s  Ireland  v.  Eade,  7  Beav.,  55.  Rackham,  17  Beav.,  485. 


CHAP.  XIX.]  ACCOUNTS.  677 

him  as  receiver,  so  that  he  himself  would  not  have  been 
entitled  to  the  credit  on  his  own  account.1 

§  814.  ,  In  case  of  rival  claimants  to  a  fund  in  the  hands 
of  a  receiver,  he  may  institute  an  action  in  the  nature  of  a 
bill  of  interpleader,  to  compel  them  to  interplead  and  de- 
termine their  rights ;  and  pending  such  action  he  may  pro- 
ceed to  render  his  accounts  and  pay  over  the  fund  into  court, 
to  abide  the  result  of  the  interpleader.2  But  a  plaintiff 
who  has  procured  the  appointment  of  a  receiver  can  not 
dismiss  his  bill  and  have  the  receiver  discharged  without 
first  requiring  him  to  pass  his  accounts.3 

§  815.  A  receiver  being  an  officer  of  the  court,  and 
neither  party  to  the  litigation  being  responsible  for  his  mis- 
feasance or  malfeasance,  it  is  held  that  plaintiffs  in  the 
action  in  which  he  is  appointed  should  not  be  delayed  in 
the  collection  of  the  amounts  due  them,  until  the  close  of  a 
litigation  concerning  the  receiver's  accounts,  which  may 
extend  over  a  considerable  period  of  time,  since  this  would 
be  a  manifest  injustice  and  hardship  upon  plaintiffs.4 

§  816.  Where  a  receiver  had  been  very  irregular  and 
careless  in  his  accounts,  so  that  it  was  impossible  to  deter- 
mine from  them  what  were  the  balances  in  his  hands  for 
which  he  was  chargeable,  it  was  deemed  proper  that  he 
should  be  specially  ordered  to  bring  in  his  accounts  every 
year  within  a  specified  time,  and  that  he  verify  by  affidavit 
the  amount  of  his  receipts  and  disbursements  and  the  bal- 
ances in  his  hands  at  the  date  of  his  reports.5 

§  817.  In  case  of  the  death  of  a  receiver,  equity  has  no 
jurisdiction,  upon  a  petition  in  behalf  of  parties  interested, 
to  order  the  executors  of  the  deceased  receiver  to  bring  in 
and  pass  his  accounts,  and  to  pay  the  balance  found  due  out 
of  his  assets.6     If,  however,  the  receiver  dies  pending  pro- 

» Battaile  v.  Fisher,  36  Miss.,  321.  4  Milwaukee  &  Minnesota  R.  Co. 

2Winfiekl  v.   Bacon,    2-4  Barb.,  v.  Soutter,  2  WaL,  510. 

154.  5  Bertie    v.     Lord    Abingdon,    8 

» White  v.   Lord    Westnieath,  2  Beav.,  53. 

Hog.,  33.  b  Jenkins  r.  Briant,  7  Sim.,  171. 


GTS  RECEIVERS.  [CHAP.  XIX. 

ceedings  against  him  for  an  accounting,  the  court  has  power 
to  make  an  order  against  his  executors  reviving  and  con- 
tinuing the  accounting  as  against  them.1  But  where  a  re- 
ceiver, appointed  for  the  benefit  of  a  tenant  for  life,  never 
acted,  but  permitted  the  solicitor  in  the  cause  to  act  as  re- 
ceiver and  to  collect  all  the  rents,  and  after  many  years  the 
executor  of  the  receiver  was  compelled  to  pay  into  court 
the  amount  found  to  be  due,  notwithstanding  the  solicitor 
had  previously  paid  a  portion  to  the  tenant  for  life,  it  was 
held  that  the  executor  could  not  maintain  a  petition  for  an 
accounting  of  what  was  paid,  and  for  a  hen  upon  the  estate 
for  the  amount  which  should  be  found  due  upon  the  account- 
ing.2 

§  818.  "When  a  receiver,  after  his  discharge,  had  not  paid 
into  court  the  balance  found  due  upon  his  account  within 
the  time  required,  he  was  ordered  to  pay  the  same,  together 
with  the  amount  which  had  been  allowed  him  for  his  salary, 
with  interest  on  both  sums  from  the  date  first  appointed  for 
payment.3  But  when  a  receiver  had  delayed  passing  his 
account  in  order  to  obtain  additional  rent  from  a  tenant, 
thereby  benefiting  the  estate,  he  was  allowed  his  commission 
or  poundage  thereon  and  the  costs  of  passing  his  account ; 4 
so,  also,  when  the  receiver  had  delayed  passing  his  account 
at  the  request  of  the  parties,  in  order  to  save  expense  pend- 
ing a  compromise.5 

§  810.  It  has  been  held  that  a  receiver  over  a  minor's 
estate  may,  upon  the  minor  coming  of  age,  be  properly  re- 
quired to  account  to  him  from  the  beginning  concerning  the 
management  of  his  affairs,  although  he  has  before  presented 
his  accounts  from  time  to  time  to  the  court.6 

§  819  a.  "When  a  receiver  is  charged  with  having  allowed 
and  paid,  under  an  order  of  court,  claims  which  are  ficti- 

i  In  re  Columbian  Insurance  Co.,  4  Flood  v.  Lord  Aldborough,  8  Ir. 

30  Hun,  812.  Eq.,  103. 

-Gurden   v.    Badcock,    6   Beav.,  5Purcell  v.  Woodley,  10  Ir.  Eq., 

1-17.  422. 

3  Harrison   v.   Boydell,   6   Sim.,  "Wildridge  v.  McKane,  2  Mol., 

211.  313. 


CIIAr.  SIX.]  ACCOUNTS.  679 

tious  and  unfounded,  the  proper  practice  for  a  creditor  de- 
siring to  contest  such  allowances  is  to  apply  to  be  made  a 
party  to  the  suit  in  which  the  order  was  made  and  to  have 
such  order  vacated.1  But  when  a  receiver's  accounts  have 
once  been  passed  and  approved  by  the  court,  they  are  only 
assailable  by  a  direct  proceeding  or  petition,  calling  atten- 
tion to  some  error,  fraud  or  mistake  in  the  accounts.  And 
when  there  have  been  several  receivers  in  the  same  cause, 
some  of  whose  accounts  have  been  passed  and  approved, 
and  a  general  order  is  then  made  requiring  the  receivers  to 
account  before  the  master,  such  order  does  not  require  that 
the  accounts  already  approved  shall  be  reopened.2 

§  8195.  While  a  receiver,  being  a  mere  officer  or  custo- 
dian of  the  court,  can  not  appeal  from  an  order  directing 
him  to  turn  over  the  property  or  money  in  his  hands,  yet,  if 
the  order  erroneously  fixes  the  amount  of  property  or  money 
in  his  hands,  and  directs  him  to  turn  over  more  than  is  in 
his  possession,  he  is  entitled  to  an  appeal  from  such  order.3 
So  he  may  appeal  from  a  final  decree  settling  his  accounts 
and  fixing  the  balance  due  from  him,  and  for  this  purpose 
he  occupies  substantially  the  position  of  a  party  to  the 
cause.4  So  the  parties  to  the  cause  in  which  he  is  appointed, 
and  who  are  interested  in  the  fund  in  his  hands,  may  appeal 
from  a  final  decree  settling  the  receiver's  accounts.5 

1  Schenck  v.  Ingrahani,  4  Hun,        3  How  v.  Jones,  60  Iowa,  70. 

67;  S.  C,  5  Hun,  397.  4 Hinckley  v.  G.,  C.  &  S.  R.  Co., 

2  Farmers  Loan  &  Trust  Co.  v.     94  U.  S.,  467. 

Central  Railroad,  2  Fed.  Rep.,  751 ;        5Hovey  v.  McDonald,  109  U.  S., 
S.  C,  1  McCrary,  352.  150. 


CHAPTER  XX. 


OF  THE  REMOVAL  AND    DISCHARGE  OF  RECEIVERS. 

I.  Removal  for  Cause, §  820 

II.  Final  Discharge, .       832 


I.  Removal  foe  Cause. 

820.  Power  of  removal  or  discharge  a  necessary  incident  to  power  of 

appointment. 

821.  Discretionary  nature  of  power  of  removal;  effect  of  relationship 

to  the  parties  as  ground  for  removal. 

822.  Receiver  not  removed  to  make  way  for  agent  of  the  parties. 

823.  Employing  counsel  of  the  parties  no  ground  for  removal. 

824.  Power  of  removal  in  vacation ;  vacating  order  of  appointment ; 

notice  of  motion  for  removal  requisite. 

825.  Removal  not  appealable;  may  be  made  after  plaintiff  is  non- 

suited and  pending  motion  for  new  trial. 

826.  Analogy  between  removing  receiver  and  dissolving  injunction ; 

removed  when  equities  of  bill  denied  by  answer. 

827.  Removal  and  substitution  by  consent ;  extending  one  receiver  in 

place  of  several. 

828.  Receiver's  interest  as  stockholder  and  director  in  plaintiff  bank ; 

employment  of  debtor  by  receiver  in  creditor's  suit. 

829.  Required  to  restore  fund  on  removal. 

830.  Receiver  not  heard  on  motion  to  vacate  his  appointment. 

831.  "When  defendants  estopped  from  seeking  removal. 
831  o.  Diligence  essential  to  application  for  removal. 


§  820.  The  subject  of  the  removal  or  discharge  of  a  re- 
ceiver, although  to  a  considerable  degree  regarded  as  a 
matter  of  practice  and  to  be  discussed  as  such,  is,  neverthe- 
less deemed  of  sufficient  importance  to  merit  a  separate 
discussion.  The  power  of  a  court  of  equity  to  remove  or  dis- 
charo-e  a  receiver  whom  it  has  appointed  may  be  regarded 


CHAP.  XX.]  REMOVAL    AND    DISCHARGE. 


6S1 


as  well  settled,1  and  it  may  be  exercised  at  any  stage  of  the 
litigation.2  Indeed,  it  would  seem  to  be  a  necessary  adjunct 
of  the  power  of  appointment,  and  to  be  exercised  as  an  inci- 
dent to  or  consequence  of  that  power ;  the  authority  to  call 
such  officer  into  being  necessarily  implying  the  authority  to 
terminate  his  functions  when  their  exercise  is  no  longer  nec- 
essary, or  to  remove  the  incumbent  for  an  abuse  of  those 
functions,  or  for  other  cause  shown.  And  the  cases  upon 
this  branch  of  the  subject  will  be  found  to  resolve  them- 
selves into  two  classes,  viz.,  cases  of  removal  or  substitution 
for  cause,  and  cases  of  discharge  because  of  the  necessity 
for  the  appointment  having  ceased  to  exist. 

§821.  As  regards  the  power  of  a  court  of  equity  to 
remove  a  receiver  for  cause  and  to  substitute  another  in  his 
stead,  it  is  to  be  observed  that  the  exercise  of  the  power  is 
regarded  as  a  matter  properly  resting  in  the  sound  discre- 
tion of  the  court,  and  hence  to  be  governed  by  the  circum- 
stances of  each  particular  case.:i  It  is  difficult,  therefore,  to 
frame  any  definite  rules  susceptible  of  general  application, 
and  the  poAver  of  removal  for  cause  is  referred  to  the  broad 
and  undefined  region  of  the  discretionary  jurisdiction  of 
courts  of  equity.     It  may  be  regarded  as  settled,  however, 

1  Ferry  v.  Bank  of  Central  New  away  Beach  Improvement  Co.,  25 
York,  15  How.  Pr.,  446.  Hun,  509.     And  see  S.  C,  25  Hun. 

2  In  re  Colvin,  3  Mel.  Ch.,  300.  376.  But  the  removal  of  a  receiver 
And  see  Crawford  v.  Ross,  39  Ga.,  over  a  corporation,  upon  the  appli- 
44.  As  to  the  removal  of  a  receiver  cation  of  its  stockholders,  has  been 
appointed  through  collusion,  and  to  denied  when  it  appeared  that  a 
the  point  that  the  proper  method  of  majority  of  the  directors  were  in 
questioning  such  an  order  of  re-  sympathy  and  co-operation  with 
moval  is  by  appeal,  and  not  by  in-  such  stockholders,  upon  the  ground 
junction  to  restrain  the  new  that  the  stockholders  might  be 
receiver  from  interfering  with  the  heard  through  the  corporation  or 
former  one,  see  Wilson  v.  Barney,  its  directors.  Fifth  National  Bank 
5  Hun,  257.  As  to  the  right  of  the  v.  P.  &  C.  S.  R.  Co.,  1  Fed.  Rep., 
attorney-general  to  ask  for  the  re-  190. 

moval  of  a  receiver  of  an  insolvent  3  Siney  v.  New  York  Consolidated 

corporation  under  the  statutes  of  Stage  Co.,  28  How.  Pr.,  481;  S.  C, 

New  York,  and  as  to  the  practice  18  Ab.  Pr.,  435. 
in  such  cases,  see  Attrill  v.  Rock- 


682  EECEIVEBS.  [CHAP.  XX. 

that  the  mere  fact  of  relationship  between  the  receiver  and 
the  plaintiff  in  the  action  in  which  he  was  appointed,  is  not, 
of  itself,  sufficient  ground  for  his  removal,  such  relationship 
affording,  at  the  most,  merely  a  circumstance  to  be  taken 
into  consideration  at  the  time  of  his  appointment.1  A  re- 
ceiver will  not,  therefore,  be  removed  solely  because  of  his 
relationship  to  the  plaintiff,  when  no  improper  conduct  has 
been  shown  on  his  part,  and  when  he  is  in  every  way  qual- 
ified for  the  office  and  has  given  ample  security,  especially 
when  his  appointment  was  requested  by  a  large  majority  of 
the  creditors  of  the  fund  in  litigation.2  But  where  the  per- 
son appointed  was  the  brother  of  one  of  the  parties  to  the  lit- 
igation, and  the  son  of  one  claiming  to  be  largely  interested 
as  a  creditor,  and  was  admitted  by  the  plaintiff  to  have 
taken  an  active  part  in  the  controversy  as  his  agent  and 
friend,  he  was  regarded  as  too  far  enlisted  in  the  cause  to 
permit  of  his  being  an  unbiased  and  impartial  receiver,  and 
he  was,  therefore,  removed.3 

§  822.  It  is  to  be  observed  that  a  court  of  equity  will 
not  remove  its  own  receivers,  in  order  to  make  way  for 
agents  or  receivers  who  may  be  selected  by  private  persons 
interested  in  the  litigation.  And  when  the  court  has  ap- 
pointed its  receiver,  who  has  entered  upon  the  duties  of  his 
office,  it  will  not  remove  him  upon  the  application  of  another 
creditor  of  the  defendant,  who  is  entitled,  under  his  security, 
to  appoint  an  agent  or  receiver  to  collect  the  rents  and 
profits  of  defendant's  estate  for  the  payment  of  such 
creditor.4 

§  823.  While  it  has  been  held  to  be  improper  for  the 
counsel  of  either  party  to  the  litigation  to  act  as  counsel 
for  the  receiver,  yet  the  mere  fact  of  the  receiver  having 
employed  as  his  own  counsel  the  counsel  of  one  of  the 

i  Wetter  v.  Schlieper,  7  Ab.  Pr.,  3  Williamson  v.  Wilson,  1  Bland, 

92;  Shainwald    v.    Lewis,    8  Fed.  418. 

Rep.,  878.  4  Sanders  v.  Lord  Lisle,  Ir.  Rep.,  4 

-  Wetter  v.  Schlieper,  7  Ab.  Pr.,  Eq.,  43. 
92. 


CHAP.  XX.]  KEM0VAL   AND   DISCHARGE.  GS3 

parties  does  not,  of  itself,  unless  shown  to  be  collusive,  fur- 
nish sufficient  ground  for  his  removal  after  he  has  entered 
upon  the  discharge  of  his  duties.1 

§  S2-L  It  is  held,  in  Georgia,  that  courts  of  equity  are  to 
be  regarded  as  being  always  open  for  the  purpose  of  re- 
moving receivers,  and  that  the  power  of  removal,  like  the 
power  of  appointment,  may  be  exercised  by  the  court  upon 
due  notice  in  vacation.2  And  since  the  appointment  is  itself 
a  matter  resting  largely  in  the  sound  discretion  of  the  court 
to  which  the  application  is  addressed,  if  the  court  at  a  sub- 
sequent stage  of  the  cause  becomes  satisfied  that  the  order 
of  appointment  was  improvidently  made,  it  has  undoubted 
power  to  vacate  such  order,  thus  in  effect  removing  the  re- 
ceiver.3 But  before  the  court  will  entertain  a  motion  for 
the  removal  of  a  receiver,  due  notice  must  be  given  of  the 
motion  in  writing,  which  notice  should  set  forth  specifically 
the  grounds  upon  which  the  removal  is  sought.  And  a 
failure  to  give  such  notice  will  warrant  the  court  in  refusing 
to  hear  the  motion.4  Nor  will  the  rule  requiring  notice  be 
relaxed,  even  though  sufficient  grounds  are  shown  for  re- 
moval, and  an  order  of  removal  made  without  such  notice 
will  be  reversed  upon  appeal.5 

§  825.  Since  the  removal  of  a  receiver  is  a  matter  ad- 
dressed to  the  sound  discretion  of  the  court,  its  decision 
removing  the  incumbent  and  substituting  another  in  his 
stead  can  not  ordinarily  be  reviewed  upon  appeal  to  an  ap- 
pellate court.6  And  when,  upon  the  final  trial  of  the  cause, 
judgment  of  nonsuit  is  rendered  against  the  party  on  whose 
application  the  appointment  was  made,  the  court  may  vacate 

iBank  of  Monroe  v.   Schermer-  Spratt,    5    N.  Y.   Weekly  Digest, 

horn,  Clarke  Ch.,  366.  25. 

2 Crawford  u.  Ross,  39  Ga.,  44.  'Campbell  v.    Spratt,   5    N.   Y. 

3  Copper  Hill  Mining  Co.  v.  Spen-  Weekly  Digest,  25. 

cer,  25  Cal.,  11.  6Sineyr.  New  York  Consolidated 

«*  Doughertys.  Jones,  37  Ga.,  348 ;  Stage  Co.,  28  How.  Pr.,  481 ;  S.  C, 

Bruns  v.   Stewart   Manufacturing  18  Ab.  Pr.,  435.    And  see  Crawford 

Co.,    31    Hun,    195;   Campbell   v.  v.  Ross,  39  Ga.,  44. 


QS±  RECEIVERS.  [CHAP.  XX. 

the  order  of  appointment,  thus  removing  the  receiver,  not- 
withstanding the  pendency  of  a  motion  for  a  new  trial.1 

§  826.  The  jurisdiction  of  a  court  of  equity  which  is  ex- 
ercised in  the  removal  of  receivers  bears  a  striking  resem- 
blance to  that  which  is  called  into  action  upon  the  dissolution 
of  an  interlocutory  injunction,  and  in  both  cases  the  power  to 
terminate  seems  to  flow  naturally  and  as  a  necessary  sequence 
from  the  power  to  create.  And  as  an  interlocutory  injunc- 
tion is  usually  dissolved  upon  the  coming  in  of  defendant's 
answer,  denying  under  oath  the  allegations  of  the  bill,2  so 
in  the  case  of  a  receivership,  if  the  answer  under  oath  fully 
and  satisfactorily  denies  the  equities  of  the  bill,  or  the  ma- 
terial allegations  upon  which  the  appointment  was  made, 
and  these  allegations  are  not  sustained  by  any  testimony  in 
the  case,  the  order  of  appointment  will  be  reversed  and  the 
receiver  will  be  removed.3  Nor  is  it  necessary,  in  all  cases, 
to  secure  the  removal  that  the  equities  of  the  bill  should  be 
entirely  negatived,  if  it  be  satisfactorily  made  to  appear  to 
the  court  that  there  is  no  necessity  for  its  intervention. 
And  if  the  court  is  satisfied,  upon  the  coming  in  of  the 
answer,  that  there  is  no  imminent  danger  and  no  pressing 
or  uro-ent  necessity  for  a  receiver,  it  is  proper  to  revoke  the 
appointment.4 

§  827.  It  is  competent  for  the  court  to  remove  one  re- 
ceiver, and  to  substitute  another  in  his  stead,  by  consent  of 
all  parties,  when  the  proceedings  are  hona  fids,  and  when 
there  is  no  attempt  to  traffic  in   the  receivership.5    And 

1  Copper  Hill  Mining  Co.  v.  Spen-  Roberts  v.  Anderson,  2  Johns.  Ch., 

cer,  25  Cal.,  11.  202:  Harris  v.  Sangston,  4  Md.  Ch., 

2Hollister  v.  Barkley,  9  N.   H.,  394;  Kaighn  v.  Fuller,  1  McCart., 

230;  Armstrong i?.  Sanford,  7 Minn.,  419;  Schoeffler  v.   Sclvwarting,    17 

49;  Anderson  v.   Reed,    11    Iowa,  Wis.,  30. 

177;    Stevens    v.   Myers,   id.,    183;        3  Voshell  v.  Hynson,  26  Md.,  83; 

Taylor  v.  Dickinson,  15  Iowa,  483;  Drury  v.  Roberts,  2  Md.  Ch.,  157. 
Hatch  v.  Daniels,  1  Halst.  Ch.,  14;  'Crawford  v.  Ross,  39  Ga.,  44. 
Washer  v.  Brown,  id.,  81;  Suffern        5Fan?an  v.  Morris,  1  Ir.  Ch.,  N. 

v.  Butler,  3  C.  E.  Green,  220 ;  Park-  S.,  680. 
inson  v.  Trousdale,  3  Scam.,  367; 


CHAP.  XX.]  REMOVAL   A>'D    DISCHARGE.  G85 

when  different  receivers  have  been  appointed  over  the  estate 
of  a  defendant,  upon  the  application  of  different  creditors, 
the  hardship  and  expense  of  such  a  state  of  facts,  as  against 
the  owner  of  the  estate,  will  justify  the  court  in  removing 
all  the  receivers  but  one,  and  extending  him  over  the  entire 
estate.1  But  the  removal  of  a  receiver  and  the  appointment 
of  another  in  his  stead  does  not  have  the  effect  of  invalidat- 
ing claims  against  the  former  receivership,  since  the  man- 
agement of  the  estate  by  the  court  is  one  and  the  same, 
although  it  becomes  necessary  to  change  the  receiver.2 

§  828.  It  has  elsewhere  been  shown,  that  the  courts  are 
always  averse  to  the  appointment  of  receivers  who  are  in 
any  manner  interested  in  the  cause,  the  office  being  regarded 
as  one  requiring  the  strictest  impartiality.3  While  this  is 
true,  yet  in  a  case  where  the  fact  of  the  receiver's  interest, 
he  being  a  stockholder  and  director  in  the  plaintiff  bank, 
was  not  known  to  the  court  at  the  time  of  his  appointment, 
and  he  had  entered  upon  the  discharge  of  his  duties  and 
had  spent  much  time  in  making  himself  familiar  with  the 
property  entrusted  to  his  charge,  and  no  objection  was 
shown  to  his  fidelity  or  honesty,  and  no  complaint  was  made 
of  any  improper  discharge  of  his  duties,  or  misconduct,  it 
was  held  that  he  should  not  be  removed  immediately  upon 
motion,  but  would  be  allowed  to  act  until  a  new  reference 
could  be  had  to  a  master  in  chancery,  to  make  a  new  ap- 
pointment.4 And  it  is  not  sufficient  cause  for  removing  a 
receiver  of  a  judgment  debtor,  appointed  in  a  creditor's  suit, 
that  he  has  employed  the  debtor  to  assist  him  in  collecting 
a  portion  of  the  indebtedness  assigned  to  the  receiver,  when 
no  part  of  the  fund  has  been  used  for  the  debtor's  benefit, 
and  lie  has  had  no  possession  of  or  control  over  the  prop- 

1  Kelly  v.  Kutledge,  8  Ir.  Eq.,  228.  insolvent  banking  corporations  and 

2  Ex  parte  Brown,  15  S.  C,  518.  the  grounds  of  removal,  under  the 

3  See  chapter  III,  ante.  statutes  of  Ohio,  Lafayette  Bank  v. 

4  Bank  of  Monroe  v.  Schermer-  Buckingham,     12    Ohio    St.,   419; 
horn,  Clarke  Ch.,  368.     Sec,  as  to  State  v.  Claypool,  13  Ohio  St.,  14. 
the  power  of  removing  receivers  of 


686  EECEIVEES.  [CHAP.  XX. 

erty  after  its  assignment  to  the  receiver,  and  when  the  solv- 
ency of  the  receiver  is  unquestioned  and  his  security  ample.1 

§  829.  When  a  person  not  in  interest  in  the  controversy 
has  fraudulently  procured  himself  to  be  appointed  receiver, 
contrary  to  the  wishes  of  all  parties  in  interest,  but  the  ap- 
pointment is  reversed  on  appeal,  thus  removing  him  from 
the  trust,  he  will  be  compelled  to  make  restitution  of  the 
fund  received  by  him  to  the  person  rightfully  entitled 
thereto,  and  will  not  be  allowed  to  make  any  deduction 
from  the  fund.2 

§  830.  Upon  a  motion  to  vacate  the  order  appointing  a 
receiver,  the  motion  being  made  by  defendant  and  assented 
to  by  plaintiff,  the  receiver  himself  should  not  be  heard  in 
opposition,  since  he  is  not  a  party  in  interest,  and  has  no 
standing  in  court  to  oppose  the  motion,  and  can  not  inter- 
fere in  questions  affecting  the  rights  of  the  parties  or  the 
disposition  of  the  property  in  his  hands.3 

§  S31.  When  defendants  in  the  cause  have  agreed  with 
plaintiffs,  that  upon  the  latter  giving  security  in  a  specified 
amount,  they  may  have  possession  and  management  of  the 
property  in  controversy,  and  may  nominate  a  receiver,  de- 
fendants occupy  a  somewhat  different  attitude  toward  the 
receiver  from  that  in  the  case  of  an  ordinary  appointment  by 
the  court.  And  in  such  a  case,  it  does  not  lie  with  defend- 
ants to  object  to  the  person  of  the  receiver  and  to  obtain 
his  removal,  unless  he  commits  some  overt  act  of  unfaith- 
fulness to  his  trust.  Nor  will  the  court,  under  such  circum- 
stances, permit  defendants  to  go  into  the  previous  acts  of 
the  receiver  in  his  capacity  as  plaintiff,  before  his  appoint- 
ment as  receiver,  to  furnish  grounds  for  his  removal.4 

§  831  a.  If  the  removal  of  a  receiver  is  sought  because 
of  informalities  in  his  appointment,  as  for  insufficiency  of 

JRoss  v.  Bridge,   24   How.  Pr.,  3L'Engle  v.  Florida  Central  R. 

163;  S.  C,  15  Ab.  Pr.,  150.  Co.,  14  Fla.,  266. 

2  O'Mahoney  v.   Belmont,  62  N.  4  Cowdrey  v.  The  Railroad  Com- 

Y.,  133,  affirming  S.  C,  37  N.  Y.  pany,  1  Woods,  331. 
Supr.  Ct.  R.,  223. 


CHAP.  XX.]  REMOVAL   AND   DISCHARGE.  6S7 

the  notice  of  the  application,  due  diligence  should  be  used 
by  the  parties  seeking  the  removal.  And  when  they  delay 
making  application  for  the  removal  for  a  considerable  period, 
during  which  the  receiver  makes  large  expenditures  in  the 
completion  of  a  railway  over  which  he  is  appointed,  they 
will  be  held  to  have  so  far  acquiesced  in  the  appointment  as 
to  be  estopped  from  asking  for  the  removal  upon  the  ground 
of  such  irregularities.1 

I  Allen  v.  D.  &  W.  R.  Co.,  3  Woods,  316. 


CSS  RECEIVERS.  [CHAP.  XX. 


II.  Final  Discharge. 

§  832.     Receiver  discharged  when   necessity  terminates ;    receiver   of 
estate    of  deceased  lunatic  discharged    on    appointment    of 
administrator. 
883.     Functions  usually  terminate  with  the  litigation ;  not  discharged 
ipso  facto  by  termination  of  suit. 

834.  Effect  of  final  decree  as  to  receiver's  discharge. 

835.  Receiver  over  two  infants  not  discharged  on  one  attaining  ma- 

jority. 

836.  Appeal  from  discharge  not  allowed ;  when  receiver  punished  by 

attachment. 

837.  Right  to  have  receiver  discharged  on  plaintiff's  demand  being 

satisfied ;  conflict  of  authority ;  the  better  doctrine  averse  to 
such  right. 

838.  Receiver  not  entitled  to  discharge  as  of  course  on  his  own  appli- 

cation ;  must  show  cause. 

839.  Mortgagee  may  apply  for  discharge  of  receiver  appointed  tc 

enforce  trusts  of  mortgagor's  will. 

840.  Owner  of  mortgaged  i^reinises  has  absolute  right  to  discharge  of 

receiver  on  paying  amount  due. 

841.  Interests  of  all  parties  kept  in  view ;  receiver  of  corporation  dis- 

charged when  corporation  shown  to  be  solvent. 

842.  Receiver  on  creditors'  bill  discharged  when  bill  denied  by  answer. 

843.  Plaintiff's  delay  in  prosecuting  his  suit  ground  for  discharging 

receiver. 

844.  Putting  purchaser  in  possession  of  lands  held  by  receiver  equiv- 

alent to  discharge. 

845.  Bankruptcy  of  receiver  as  ground  for  discbarge. 

846.  Defendant  may  move  for :  practice  on  application ;  costs ;  notice. 

847.  Order  of  discharge  not  appealable  in  Michigan. 

848.  Discharge  no  bar  to  action  against  receiver  for  liability  incurred. 

§  832.  As  regards  the  question  of  the  final  discharge  of 
a  receiver,  as  distinguished  from  his  removal  for  cause,  it 
may  be  laid  down  as  a  general  proposition,  that  when  the 
necessity  for  the  office  ceases  to  exist,  the  office  itself  must 
terminate  and  the  receiver  be  discharged.  And  when  a 
court  of  equity  has  temporarily  taken  possession  of  property 
by  the  hands  of  its  receiver,  until  the  proper  person  can  be 
determined  who  is  entitled  to  take  it,  the  court  will  not 


CHAP.  XX.]  REMOVAL    AND    DISCHARGE.  CS9 

continue  such  possession  after  this  necessity  ceases.1  Thus, 
where  a  receiver  is  appointed  to  take  charge  of  the  assets 
and  property  of  a  deceased  lunatic,  until  it  may  be  deter- 
mined who  is  entitled  thereto,  upon  the  appointment  of  an 
administrator  pendente  lite  by  the  proper  court  of  probate 
jurisdiction,  the  receiver  will  be  discharged  and  directed  to 
turn  over  the  assets  to  the  administrator  pendente  lite?  And 
when  a  receiver  has  been  improperly  appointed  over  prop- 
erty belonging  to  a  person  not  a  party  to  the  cause,  the  court 
will  order  the  discharge  of  the  receiver,  although  the  cause 
has  abated  by  the  death  of  the  sole  defendant.3 

§  833.  The  functions  of  a  receiver  usually  terminate  with 
the  termination  of  the  litigation  in  which  he  was  appointed.4 
And  where  the  bill  upon  which  the  appointment  was  made 
is  afterward  dismissed  upon  demurrer,  the  duties  of  the  re- 
ceiver cease  as  between  the  parties  to  the  action.5  So  where 
defendant  in  the  action  in  which  the  receiver  was  ap- 
pointed finally  obtains  judgment  therein  in  his  favor,  the 
entry  of  judgment  would  seem  to  have  the  effect  of  termi- 
nating the  receiver's  functions,  although  plaintiff  in  the 
action  perfects  his  appeal  to  the  appellate  court.13  It  is  to 
be  observed,  however,  that  the  abatement  of  the  action,  or 
the  entry  of  final  judgment  therein,  does  not  have  the 
effect  of  discharging  the  receiver  ipso  facto.1  And  although 
as  between  the  parties  to  the  litigation  his  functions  have 
terminated  with  the  determination  of  the  suit,  he  is  still 
amenable  to  the  court  as  its  officer  until  he  has  complied 
with  its  directions  as  to  the  disposal  of  the  funds  which 
he  has  received  during  the  course  of  his  receivership.     And 


I  In  re  Colvin,  3  Md.  Ch.,  297.  5  Field  v.  Jones,  11  Ga.,  413. 

2 In  re  Colvin,  3  Md.  Ch.,  297.  « Ireland  v.  Nichols,  40  How.  Pr., 

*  Lavender  v.  Lavender,  Ir.  Rep.,  85;  S.  C,  9  Ab.  Pr.,  N.  S.,  71. 

9  Eq. ,  593.  "'  McCosker  V.  Brady,  1  Barb.  Ch. , 

*  Field  v.  Jones,  11  Ga. ,  413 ;  Ire-  346 ;  Ireland  v.  Nichols,  40  How.  Pr., 
land  v.  Nichols,  40  How.  Pr.,  85 ;  S.  85 ;  S.  C,  9  Ab.  Pr.,  N.  S.,  71.  See, 
C,  9  Ab.  Pr.,  N.  S.,  71;  Beverley  also,  Whiteside  v.  Prendergast,  2 
v.  Brooke,  4  Grat.,  220.  Barb.  Ch.,  471. 

44 


COO  RECEIVEKS.  [CHAP.  XX. 

where  the  bill  is  dismissed  upon  demurrer,  it  is  the  plain 
duty  of  the  court  to  direct  the  receiver  to  restore  the  funds 
received  to  the  person  from  whom  they  were  taken.1  But 
the  order  of  discharge  does  not  necessarily  follow,  in  all 
cases,  because  of  the  determination  of  the  suit,  and  the  court 
may,  upon  sufficient  cause  shown,  either  discharge  or  con- 
tinue him,  according  to  the  exigencies  of  the  case.2 

§  834.  Since  the  final  decree  in  the  cause  is  generally 
decisive  of  the  subject-matter  in  controversy,  and  deter- 
mines the  right  to  the  possession  of  the  fund  or  property 
held  by  the  receiver,  it  is  usually  the  case  that  such  decree 
supersedes  the  functions  of  the  receiver,  since  there  is  then 
nothing  further  for  him  to  act  upon,  although  it  would  seem 
to  be  still  necessary  that  a  formal  application  be  made  for 
his  discharge.  But  when  the  court  by  its  decree  does  not 
attempt  to  decide  the  main  question  in  controversy  and 
leaves  the  receiver's  possession  undisturbed,  it  can  not  be 
held  to  have  the  effect  of  operating  as  a  discharge,  or  of 
superseding  his  functions.3 

§  835.  In  general,  a  receiver  will  not  be  discharged  until 
the  object  for  which  he  was  appointed  has  been  fully  ac- 
complished, or  until  the  court  is  satisfied  that  the  exigency 
calling  for  a  receiver  has  ceased.4  For  example,  where,  as 
between  tenants  in  common  of  real  estate,  two  of  whom  are 
infants,  a  receiver  is  appointed  for  the  protection  of  the  in- 
fants, with  directions  to  pay  over  to  the  adults  their  share, 
he  will  not  be  discharged  upon  the  application  of  one  of  the 
infants  on  coming  of  age,  the  other  not  having  attained  his 
majority.  In  such  case,  the  object  sought  by  invoking  the 
extraordinary  powers  of  a  court  of  equity  being  the  protec- 
tion of  the  property  during  the  infancy  of  both,  the  discharge 
will  not  be  allowed  until  this  object  is  fully  accomplished.5 

i  Field  v.  Jones,  11  Ga.,  413.  *  Smith  v.  Lyster,  4  Beav.,  227; 

2  Ireland  v.  Nichols,  40  How.  Pr.,  In  re  Long  Branch  &  Sea  Shore  R. 
85 ;  S.  C,  9  Ab.  Pr.,  N.  S.,  71.  Co.,  9  C.  E.  Green,  398. 

3  Beverley  v.  Brooke,  4  Grat.,  220.  5  Smith  v.  Lyster,  4  Beav., 
But  see  Visage  t?.  Schofield,  60  Ga.,  227. 

680. 


i 


CHAP.  XX.]  REMOVAL    AND    DISCHARGE.  C91 

§  836.  It  follows  from  the  well-established  doctrine  that 
a  receiver  is  not  the  agent  or  representative  of  either  party 
to  the  litigation,  and  in  no  manner  interested  in  its  result, 
that  he  can  not  properly  appeal  from  an  order  of  the  court 
discharging  him  from  his  trust  and  directing  him  to  turn 
over  the  property  received  to  another  person.  Being  merely 
the  officer  or  representative  of  the  court,  without  personal 
interest  or  personal  rights  in  the  litigation,  the  right  to  dis- 
charge him  rests  with  the  court  at  any  stage  of  the  contro- 
versy, and  from  the  exercise  of  this  right  he  can  not  appeal.1 
The  court  will,  therefore,  continue  to  execute  its  order,  and 
will  compel  the  receiver  to  turn  over  the  property  as  directed 
in  the  order  of  discharge,  notwithstanding  he  has  prayed 
an  appeal,  and  has  filed  an  appeal  bond.  And  in  case  of  re- 
fusal on  the  part  of  the  receiver  to  comply  with  the  direc- 
tion in  the  order  of  discharge  as  to  the  disposition  to  be 
made  of  the  property,  the  court  may,  if  necessary,  enforce 
obedience  by  attachment.2  And  because  the  appointment 
of  a  receiver  determines  no  rights  between  the  parties  liti- 
gant, his  possession  being  merely  that  of  the  court,  a  party 
to  the  cause  can  not  appeal  from  an  order  discharging  a 
receiver.3 

§  837.  "With  reference  to  the  question  of  the  right  of  a 
defendant,  against  whom  a  receiver  has  been  appointed,  to 
have  him  discharged  upon  extinguishing  or  satisfying 
plaintiff's  demand,  there  being  other  parties  interested  in 
having  the  receiver  continued,  a  direct  conflict  of  authority 
exists  in  the  decided  cases.  The  doctrine  of  the  English 
Court  of  Chancery,  as  laid  down  by  Lord  Eldon,  was,  that 
with  the  right  of  the  plaintiff  to  a  receiver  must  fall  the 
rights  of  all  other  parties  to  the  action ;  and  that  a  receiver 
appointed  in  behalf  of  a  plaintiff  should  be  discharged  when 
plaintiff's  right  to  maintain  the  action  failed,  notwithstand- 
ing other  parties  to  the  litigation  might  insist  on  their  right 

i/n  re  Colvin,  3  Md.  Ch.,  300;  3  Washington  City  &  P.  L.  R. 
EHicott  v.  Warford,  4  Md.,  80.  Co.  v.  S.  M.  R.  Co.,  55  Md.,  153. 

2  In  re  Colvin,  3  Md.  Ch.,  300. 


C02  RECEIVERS.  [CHAP.  XX. 

to  have  the  receiver  retained  as  their  receiver.1  The  better 
doctrine,  however,  as  deduced  from  the  clear  weight  of  au- 
thority and  from  the  better  legal  reasoning,  is  directly  the 
reverse.  And  since  the  appointment  of  a  receiver  is  re- 
garded as  being  made  for  the  benefit  of  all  parties  in  inter- 
est in  the  litigation,  he  will  not  be  discharged  merely  upon 
the  application  of  the  party  at  whose  instance  he  was  ap- 
pointed, after  his  demand  against  the  defendant  is  satisfied, 
when  the  rights  of  other  parties  are  involved.  The  duty  of 
the  court  being  to  protect  the  rights  of  all  parties  in  inter- 
est, and  not  merely  those  of  the  plaintiff  at  whose  suit  the 
extraordinary  aid  of  the  court  has  been  invoked,  it  will  not 
permit  the  receiver  to  be  discharged  upon  the  consent  of  the 
plaintiff,  when  it  appears  that  the  discharge  may  prejudice 
the  rights  of  other  parties  to  the  action  who  do  not  consent 
thereto.2  Thus,  when  a  legatee  under  a  will  has  filed  a  bill 
in  behalf  of  himself  and  of  such  other  creditors  and  leg- 
atees as  may  come  in  under  the  decree,  to  obtain  satisfac- 
tion of  his  legacy,  and  has  joined  as  a  defendant  an  incum- 
brance!' having  a  charge  upon  the  estate,  the  receiver 
will  not  be  discharged  upon  the  consent  of  plaintiff,  without 
the  consent  of  such  incumbrancer.3    And  in  any  event,  a 

1  Davis  v.  Duke  of  Marlborough,  to  have  the  receiver  must  fall  the 

2  Swans.,    168.     This  was  a  case  rights  of    the  other    parties.       It 

where  plaintiff ,  claiming  to  be  an  would  be    most  extraordinary  if, 

equitable  creditor  or  incumbrancer  because    a    receiver  has  been  ap- 

of  defendant,  had  obtained  a  re-  pointed  on  behalf  of  the  plaintiff, 

ceiver  of  the  rents  and  profits  of  any  defendant  is  entitled  to  have  a 

defendant's  real  estate  upon  which  receiver  appointed  on  his  behalf, 

he  claimed  to  have  a  charge.     De-  My  decided    opinion    is    that  the 

fendant  having   paid  and   plaint-  order  for  the  receiver  must  be  dis- 

iff   received  the  amount   claimed  charged,    and    that    all     falls    to- 

to  be  due,   the  receiver  was  dis-  gether." 

charged,  notwithstanding  other  de-  -  Fay  v.  Erie  &  Kalamazoo  Rail- 

fendants,  claiming  to  have  annui-  road  Bank,  Harring.  (Mich.),  194; 

ties  or  incumbrances  upon  the  same  Bainbrigge  v.  Blair,  3  Beav.,  421; 

property,  objected  and  asked  to  be  Largan  v.  Bowen,  1  Sch.  &  Lef., 

heard  against  the  discharge.     Lord  296. 

Eldon    observes :      "I    apprehend  3  Largan  v.  Bowen,  1  Sch.  &  Lef., 

that  with  the  right  of  the  plaintiff  296. 


CIIAP.  X.X.j  REMOVAL   AND    DISCHARGE.  C93 

plaintiff  who  has  procured  the  appointment  of  a  receiver 
can  not  dismiss  his  bill  and  have  the  receiver  discharged, 
without  the  receiver  being  first  required  to  pass  his  ac- 
counts.1 

§  838.  A  receiver,  being  appointed  for  the  interest  of 
the  parties  to  the  action  rather  than  his  own,  is  not  entitled 
to  his  discharge  as  of  course  upon  his  own  application,  since 
the  court  will  not  permit  the  parties  to  be  put  to  the  ex- 
pense and  inconvenience  of  a  change  simply  because  the 
receiver  desires  to  be  relieved  from  the  trust.  Where,  there- 
fore, a  receiver  seeks  to  be  relieved  from  his  duties  and  to 
have  another  appointed  in  his  place,  he  will  be  required  to 
show  some  reasonable  cause  for  the  application,  especially 
when  his  discharge  and  the  substitution  of  another  person 
might  result  in  inconvenience  to  the  parties  in  interest  and 
to  third  parties.2  And  it  will  not  suffice  to  sustain  such  an 
application,  that  the  receiver  alleges  his  inability,  because 
of  other  engagements,  to  properly  close  up  the  business  of 
his  receivership,  since  such  reasons,  while  sufficient  to  excuse 
him  from  accepting  the  trust  in  the  first  instance,  are  not 
sufficient  ground  for  discharging  him  from  his  obligation 
after  it  has  once  been  accepted.3 

§  839.  When  a  receiver  has  been  appointed  over  mort- 
gaged premises  in  an  action  to  enforce  and  carry  into  exe- 
cution the  trusts  of  the  mortgagor's  will,  it  would  seem 
that  a  mortgagee,  who  was  not  a  party  to  the  suit,  is  enti- 
tled to  apply  for  the  receiver's  discharge.  And  this  is  re- 
garded as  the  proper  course  for  him  to  pursue,  since  he  has 
no  power  to  divest  the  receiver's  possession  merely  by  no- 
tice to  the  tenants  of  the  mortgaged  premises  to  pay  their 
rents  to  him.4 

§  840.  "While  the  propriety  of  discharging  a  receiver, 
like  that  of  appointing  him,  is  to  some  extent  a  matter  of 

i  White  v.  Lord  Westmeath,   2  3  Beers  v.  The  Chelsea  Bank,  4 

Hog.,  33.  Edw.  Ch.,  277. 

2  Beers  v.  The  Chelsea  Bank,  4  4  Thomas  v.  Brigstocke,  4  Rues., 

Edw.  Ch.,  277;  Smith  v.  Vaughan,  64. 
Ca.  temp.  H.,  251. 


G94  RECEIVERS.  [CHAP.  XX. 

judicial  discretion,  yet  in  some  cases  the  right  to  a  discharge 
becomes  an  absolute  right,  which  the  court  has  no  discre- 
tion to  refuse.  Thus,  when  a  receiver  of  mortgaged  prem- 
ises is  appointed  and  takes  possession,  in  an  action  for  the 
foreclosure  of  the  mortgage,  upon  the  owner  of  the  equity 
of  redemption  offering  to  pay  the  mortgage  indebtedness, 
or  so  much  thereof  as  is  due,  his  right  to  have  the  receiver 
discharged  is  an  absolute  right,  the  denial  of  which  is  judi- 
cial error.1 

§  841.  In  passing  upon  an  application  for  a  receiver's 
discharge,  the  court  should  have  in  view  the  interests  of  all 
parties,  and  if  satisfied  that  the  rights  of  all  parties  in  in- 
terest will  be  best  promoted  by  granting  the  discharge,  it 
should  be  allowed.  Thus,  where  a  receiver  is  appointed 
over  a  corporation,  under  a  law  of  the  state  authorizing 
receivers  of  insolvent  corporations,  it  is  proper  for  the  court 
to  discharge  the  receiver  upon  motion  of  the  defendant 
corporation,  upon  being  satisfied  that  it  is  in  solvent  cir- 
cumstances and  able  to  resume  business,  and  that  the  inter- 
ests of  the  creditors  will  be  best  secured  by  this  course.2 

§  842.  Where,  upon  a  creditor's  bill  filed  against  a  judg- 
ment debtor  and  a  mortgagee  to  whom  he  had  mortgaged 
his  personal  property,  in  trust  for  the  payment  of  various 
debts,  an  injunction  is  granted  and  a  receiver  appointed, 
upon  allegations  in  the  bill  that  the  debtor  is  in  possession 
of  the  property  and  converting  the  proceeds  of  sales  to  his 
own  use,  the  bill  also  alleging  the  debtor's  insolvency  and 
consequent  danger  of  plaintiff  losing  his  debt,  if  these 
charges  are  expressly  and  fully  denied  by  the  answer,  the 
court  should  dissolve  the  injunction  and  discharge  the 
receiver.3 

§  843.  The  negligence  and  delay  of  a  plaintiff,  at  whose 
instance  a  receiver  has  been  appointed,  may  be  sufficient 
ground   for   discharging   the    receiver.     Thus,   where  the 

1  Milwaukee  &  Minnesota  E.  Co.        -  Ferry  v.  Bank  of  Central  New 
v.  Soutter,  2  Wal.,  510 ;  S.  C,  Wool-    York,  15  How.  Pr.,  445. 
worth's  C.  C,  49.  3 Furlong  v.  Edwards,  3  Md.,  99. 


CHAP.  XX.]  REMOVAL   AND   DISCHARGE.  C95 

plaintiff,  after  moving  for  the  appointment  of  a  receiver  of 
his  debtor's  property,  consents  that  the  proceedings  may  he 
dormant,  and  takes  no  further  steps  therein  for  a  period  of 
over  a  year,  and  until  another  creditor  has  procured  the 
appointment  of  a  receiver,  the  court  will  not  allow  the  one 
thus  appointed  upon  the  subsequent  application  to  be  dis- 
placed, but  will  discharge  the  other.1 

§  844.  The  putting  a  purchaser  into  possession  of  lands 
held  by  the  receiver  in  a  cause,  and  sold  under  the  final 
decree,  is  equivalent  ipso  facto  to  a  discharge  of  the  re- 
ceiver, and  is  sufficient  ground  for  vacating  his  recogni- 
zance.2 

§  845.  A  receiver  appointed  in  a  cause,  having  filed  his 
petition  in  bankruptcy  and  compromised  with  his  creditors, 
which  compromise  was  approved  by  the  court,  it  was  or- 
dered that  he  be  discharged  from  his  receivership  and  pass 
his  final  accounts.3 

§  846.  A  defendant  in  the  action  in  which  a  receiver  has 
been  appointed  has  the  undoubted  right  to  move  for  his 
discharge  pendente  lite,  and  upon  such  motion  the  court 
will  not  enter  upon  the  question  whether  the  order  of  ap- 
pointment was  originally  opposed  by  the  defendant  at  the 
time  it  was  made.4  Under  the  English  practice,  the  receiver, 
although  served  with  the  petition  for  his  discharge,  need 
not  appear  upon  the  hearing  of  the  petition,  since  he  is 
merely  the  officer  of  the  court.  JSTor  can  he  be  allowed  his 
costs  when  he  has  appeared  upon  such  application.5  But 
while  it  is  regarded  as  the  proper  practice  to  notify  all  par- 
ties in  interest  of  an  application  for  the  discharge  of  a  re- 
ceiver, the  fact  that  he  has  been  discharged  without  such 

1  National  Mechanics  Banking  *  Grenfell  v.  Dean  and  Canons  of 
Association    v.    Mariposa    Co.,   60    Windsor,  2  Beav.,  544. 

Barb.,  423.  5 Herman  v.  Dunbar,  23  Beav., 

2  Anonymous,  2  Ir.  Eq.,  416;  312.  And  see  generally  as  to  the 
Ponsonby  v.  Ponsonby,  1  Hog.,  English  practice  upon  applications 
321.  to  discharge  receivers  and  vacate 

3Ellard  v.  Cooper,  17  Ir.  Ch.,  N.  their  recognizances,  Lawson  v. 
S.,  151.  Ricketts,  11  Beav.,  627. 


090  EECEIVEES.  [CHAP.  XX. 

notice  to  the  defendants  in  the  cause  may  be  treated  as  a 
mere  irregularity  which  will  not  justify  a  reversal  of  the 
order  upon  appeal.1 

§  847.  It  is  held,  in  Michigan,  that  an  order  discharging 
a  receiver  and  providing  for  passing  his  accounts,  for  can- 
celing his  bond,  and  for  paying  into  court  any  surplus  in  his 
hands,  and  for  restoring  the  property  of  which  he  had  taken 
possession  as  receiver,  is  not  such  a  final  order  as  is  appeal- 
able under  the  laws  of  the  state.2 

§  848.  As  regards  the  effect  of  the  discharge  of  a  re- 
ceiver upon  liabilities  incurred  by  him  during  his  receiver- 
ship, it  is  held  that  the  discharge  does  not  constitute  a  bar 
to  bringing  any  action  against  him  on  account  of  such  mat- 
ters, when  the  liability  incurred  is  suflicient  to  create  a 
right  of  action.  For  example,  when  a  receiver  has  taken 
possession  of  property  belonging  to  third  persons,  and  has 
sold  it  under  and  by  virtue  of  his  receivership,  and  after 
notice  of  the  rights  claimed  by  such  persons,  the  court  will 
permit  them  to  bring  an  action,  notwithstanding  his  dis- 
charge, especially  when  they  were  not  notified  of  the  appli- 
cation for  his  discharge.3 

i  Coburn  v.  Ames,  57  Cal.,  201.  3  Miller  v.  Loeb,  64  Barb.,  454. 

2  Colgate  v.  Michigan  Lake  Shore 
R.  Co.,  28  Mich.,  288. 


INDEX. 


A. 

ACCOUNT,  Section 

failure  of  receiver  to  render,  fixes  liability  on  bond  ....  129 

of  receiver  of  railway,  what  expenditures  allowed    ....  392 

of  executor,  not  examined  on  application  for  receiver  against .  720 

receiver's  accounts 797-819 

duty  of  receiver  to  file 797 

held  to  great  strictness        797 

when  delay  not  justifiable 797 

receiver  not  entitled  to  jury  to  pass  on 797 

expenditures  must  be  authorized  by  court 798 

receiver  must  produce  vouchers 798 

reward  paid  for  lost  books  allowed 798 

entitled  to  charge  for  watching  property 798 

reference  to  master  as  to  whether  expenditure  beneficial  .  798 

unnecessary  expenses  not  ratified 799 

refused  compensation  paid  deputy 799 

when  facts  of  employment  should  be  reported  to  court      .  799 

master's  report  on 800,  801 

review  of 800 

courts  investigate  principles  of,  but  not  items    .     .  800, 801 

distinction  as  to 801 

exceptions  to 801 

application  from  stranger  to  pass  not  entertained     .     .     .  802 

receiver  not  compelled  to  account  to  party 802 

party  may  move  for  account        802 

duty  to  account  once  a  year 802 

should  keep  funds  separate 803 

liability  for  interest 803,  S04 

on  mixing  funds 803 

on  balances 804 

on  funds  derived  from  sale 804 

from  what  time  required  to  pay 804 

on  illegal  appropriation 804 


698 


INDEX. 


ACCOUNT  —  Continued. 

receiver's  counsel  fees 

receivers  entitled  to  payments  for 

employment  of  counsel  should  be  authorized     . 

not  allowed  for  unsuccessful  defense  .... 
for  defending  fraudulent  appointment     .     . 

when  allowed  for  defending  motion  for  removal 

allowed  receiver  of  lunatic's  estate      .... 

fees  to  counsel  for  parties,  when  disallowed  .     . 
when  allowed 

services  by  receiver  as  solicitor  for  administrator 

not  allowed  counsel  fees  paid  to  himself  .     .     . 
costs 

of  appointment  entitled  to  priority      .     .     .     . 

when  receiver  required  to  pay 

when  not  charged  with  costs  of  new  appointment 

when  defendant  in  suit  by  receiver  entitled  to  . 

when  dependent  on  receiver's  success       .     .     . 

of  unauthorized  litigation,  receiver  not  allowed 

of  improvident  litigation,  not  allowed      .     .     . 

for  appearing  on  motion  to  discharge  not  allowed 

when  receiver  may  move  for  allowance  of  .  . 
when  receiver  charged  with  hire  of  property  .  . 
when  not  allowed  payments  made  for  predecessor  . 
receiver  may  render  pending  interpleader  .  .  . 
plaintiff  can  not  have  receiver  discharged  without  passing 
plaintiffs  should  not  be  delayed  pending  litigation  concern- 
ing      •     • 

when  ordered  to  bring  in  yearly  and  verify  by  affidavit     . 
executors  of  receiver,  not  ordered  to  bring  in      ...     . 

when  entitled  to  petition  for  account  of  payments 
when  receiver  deprived  of  salary  for  default  in  ...     . 

when  allowed  commission  after  delay 818 

receiver  over  minor  attaining  majority  must  account  from 

first 819 

how  receiver's  accounts  questioned 819  a 

appeal  from  settlement  of  accounts 819  b 

ACCOUNTABILITY, 

of  receiver,  strictness  exacted 


Section 
805-803 
805 
805 
805 
805 
805 
805 
806 
806 
807 
808 
809-812 
809 
809 
809 
810 
811 
811 
811 
812 
812 
813 
813 
814 
814 

815 
816 
817 
817 
818 


38 


ACCOUNT  BOOKS, 

receiver  required  to  produce  before  master 544 

ACQUIESCENCE, 

bars  right  to  receiver 14 

in  appointment,  effect  of 37 


INDEX.  COO 

ACQUIESCENCE  —  Continued.  Section 

in  debtor's  possession  of  property,  when  bars  receiver  in  aid  of 

judgment  creditor 402 

in  defendant's  possession  of  real  property  bars  receiver       .     .  560 

ACTIONS.    (See  Right  of  Action,  Suits.) 

ADMINISTRATION,    (See  Administrator.) 

receiver  not  granted  to  interfere  with 427 

ADMINISTRATORS,    (See  Executors.) 

receiver  against,  when  order  appealable 27 

of  receiver,  when  ordered  to  pay  over 285 

of  deceased  partner,  eligible  as  receiver 78 

when  entitled  to  receiver  as  against  surviving  partner    532,  533 

receivers  over 706-724 

not  allowed  when  it  would  interfere  with  due  course  of  ad- 
ministration    716 

receiver  of  in  personal  capacity  not  entitled  to  rents  in  admin- 
istrative capacity 717 

receiver  refused  on  bill  by  surety  on  bond  of 721 

granted  in  favor  of  ward 722 

ADMINISTRATRIX.    (See  Administrators,  Executors.) 

AFFIDAVITS, 

copies  of  should  be  served 84 

admissible  for  plaintiff  after  answer 85 

admissible  to  explain  doubtful  passage  in  answer       ....  85 

may  be  presented  on  hearing  of  motion 88 

when  copies  of  should  go  to  appellate  court 88 

should  be  distinct  and  precise 89 

as  to  insolvency  of  bank,  need  not  be  positive 89 

of  defendant,  when  regarded  as  an  appearance 103 

as  to  insolvency,  receiver  refused  when  insufficient  ....  106 

interlocutory  application  before  answer,  heard  on      ....  107 

facts  may  be  verified  by  affidavit  of  plaintiff  alone  ....  107 

admissible  for  defendant  in  opposition  to  motion 107 

of  receiver  on  information  and   belief,  sufficient  for  attach- 
ment for  interference  with  rents 167 

general  allegations  of  fraud  in,  not  sufficient  to  warrant  re- 
ceiver over  corporation 292 

as  to  insolvency  of  bank  on  information  and  belief,  when  in- 
sufficient        346 

when  sufficient 353 

when  receiver  required  to  verify  account  by 816 

AGENT, 

receiver  not  an 1 


700  INDEX. 

AGREEMENT,                                                                                             Section 
by  receiver,  power  of  court  to  vacate  or  modify 186 

ALIMONY.    (See  Divorce.) 

ANNUITANT, 

not  allowed  receiver  over  a  pension 31 

may  have  receiver  when  annuity  in  arrears 410,  574 

not  allowed  receiver  when  he  can  distrain 574 

may  have  receiver  as  against  prior  mortgagee  not  in  possession    683 

ANNUITY,    (See  Annuitant.) 

purchase  of  by  receiver,  when  set  aside 194 

ANSWER, 

denial  in,  bar  to  a  receiver 24 

receiver  formerly  granted  after 103 

granted  before,  under  modern  practice 103 

grounds  of  interference  before 104,  105 

strong  grounds  required  for  receiver  before 106 

of  corporation  under  seal,  when  not  decisive 355 

waiver  of  under  oath,  no  bar  to  receiver  on  creditor's  bill    .     .     434 
denial  in,  in  partnership  cases,  bar  to  receiver       ....  491,  515 

ground  for  dissolving  injunction 491 

receiver  in  foreclosure  of  leasehold  mortgage  allowed  before   .     665 

APPEAL, 

discretion  of  court  below  not  controlled  on 25 

not  granted  from  interlocutory  order  appointing  receiver    .     .  26 

when  granted  in  Michigan 27 

from  appointment  of  receiver  against  administrator  ....  27 

against  surviving  partner 27 

allowed  if  right  finally  determined 27  a 

effect  of  supersedeas  pending 190 

effect  of,  on  receiver's  functions 29 

pending,  receiver  may  be  appointed  in  another  suit  ....  30 

want  of  notice  as  ground  of 112 

effect  of,  on  receiver's  possession 136,  161 

by  receiver,  from  adverse  decision,  not  evidence  of  misman- 
agement    207 

receiver  entitled  to,  from  adverse  judgment 264 

from  order  refusing  compensation 796 

from  order  settling  accounts 8196 

parties  entitled  to,  from  settlement  of  receiver's  accounts  .     .  819  b 
on  question  of  jurisdiction,  receiver  not  ordered  to  sell  pending    543 

not  allowed  from  discharge 836 

APPEAL  BOND, 

when  receiver's  duty  to  sue  on  without  leave 208 


INDEX. 


701 


APPEARANCE,  Section 

receiver  formerly  granted  only  after 103 

affidavit  of  defendant  considered  as 103 

of  counsel  in  suit  against  receiver,  waiver  of  want  of  leave  to 

bring  suit 261 

ARREST, 

when  receiver  exempt  from 183 

ASSESSMENTS, 

on  premium  notes  to  insurance  company,  receiver's  right  of 

action  for 32G 

what  receiver  must  allege  and  prove 327 

receiver  must  make  assessment  and  apportionment       .     .  328 

receiver  takes  place  of  directors 329 

functions  of  court  in  making 321) 

receiver  may  make  new 330 

approval  of  by  court,  not  a  judicial  act 330 

form  of,  and  proofs  required 331 

receiver  may  sue  on,  to  pay  equitable  claims  for  losses  .     .  332 

what  defense  denied  maker 332 

ASSIGNEE, 

of  debtor,  rights  not  determined  by  receivership 411 

refusal  to  act,  ground  for  receiver 412 

mismanagement  of,  ground  for  relief 412 

of  partner,  when  entitled  to  receiver 507 

of  lease,  denied  receiver 579 

of  insolvent  debtor,  when  allowed  receiver  of  rents  ....  587 

ASSIGNEE  IN  BANKRUPTCY, 

when  subordinate  to  receiver  in  state  court 51,  52 

can  not  dispossess  receiver  over  mortgaged  premises  appointed 

by  state  court 52 

can  not  have  receiver  over  bankrupt's  property  held  by  re- 
ceiver of  state  court 52 

actions  by  to  recover  property  held  by  receiver 52 

of  partnership,  when  allowed  receiver  against  assignment  for 

creditors 57 

receiver  of  debtor  incompatible  with 77 

when  required  to  surrender  possession  to  receiver      ....  153 

of  one  partner,  exclusion  from  firm 527 

ASSIGNMENT, 

by  defendant  to  receiver,  right  of  action  under 244 

by  insurance  company,  ground  for  receiver 304 

of  chose  in  action  of  corporation  by  receiver 338 

fraudulent,  by  judgment  debtor,  ground  for  receiver     ...  411 

rights  under,  not  determined  by  receivership 411 


702  INDEX. 

ASSIGNMENT  —  Continued.  Section 

receiver  allowed,  on  refusal  of  assignee  to  act 412 

on  mismanagement  by 412 

not  appointed  to  set  aside,  when  it  may  be  done  by  judgment 

creditor 414 

when  title  vests  in  receiver  on  setting  aside 423 

to  receiver,  effect  of  as  to  passing  title 443 

what  passes  to  receiver  under 444 

should  except  exempted  property 444 

irregularities  in  appointment  no  justification  for  refusal  to 

assign 445 

debtors  compelled  to  make,  though  swearing  to  no  property    .  446 

partakes  of  nature  of  mortgage 446 

no  re-assignment  necessary 446 

not  necessary  under  New  York  code 447 

fraudulent  by  debtor,  receiver  may  sue  to  set  aside   ....  454 

should  join  all  fraudulent  grantees 454 

limit  to  receiver's  right  of  action 455 

l;               can  not  sue  when  creditors  estopped 456 

receiver  can  not  take  forcible  possession  of  property  as- 
signed       457 

debtor  proper  defendant 459 

for  benefit  of  creditors 458-460 

action  by  receiver  to  set  aside,  when  assignees  may  retain 


possession 


458 


when  receiver  denied  injunction  and  receiver    .     .     .  458 

what  receiver  must  allege 459 

by  insolvent  partners  after  dissolution,  ground  for  receiver      .  517 
by  continuing  partner  for  benefit  of  all  creditors,  not  ground 

for 518 

by  one  partner  to  exclude  copartner,  ground  for 523 

assignee  can  not  clef  eat  application 523 

ASSISTANCE.    (See  Writ  of  Assistance.) 

ATTACHMENT, 

receivership  compared  with 5,  6 

for  not  accounting,  surety  of  receiver  liable  for  costs  of      .     .  131 

for  failure  to  surrender  property  to  receiver 144 

receiver  not  subject  to  garnishment  as  to  assets  in  possession  .  151 

may  be  garnished  when  not  yet  in  possession      ....  151 

punishment  by,  for  contempt  of  court  in  interfering  with  re- 


ceiver s  possession 


163 


for  interference  with  collection  of  rents  by  receiver  ....  167 

against  defendant  for  refusing  to  surrender  property      ...  168 
for  contempt  in  refusing  to  surrender  to  receiver,  court  the 

only  competent  judge 169 


INDEX.  T03 

ATTACHMENT—  Continued.  Section 

for  interference  with  receiver's  possession,  actual  disturbance 

necessary 171 

levy  and  sale  by  sheriff  considered 171 

courts  averse  to  punishment  as  between  different  receivers  173 

against  receiver  for  refusing  to  surrender  possession       .     .     .  174 

of  corporate  assets,  not  dissolved  by  receivership      ....  348 

not  allowed  after  receivership 348 

against  partners  to  deliver  assets  to  receiver 541 

funds  held  by  receiver  of  firm  not  subject  to 552 

against  tenants  for  refusing  to  pay  rent  to  receiver    .     .     .  625,  626 

rights  of  third  persons  not  determined  on 627 

ATTORNEY, 

lien  of,  on  fund  for  fees,  paramount  to  receiver's  title     .     .     .  138 

when  required  to  deliver  trust  property  to  receiver     ....  144 

fraud  of,  when  receiver  not  liable  for 275 

ATTORNEY-GENERAL, 

proceedings  by,  against  insolvent  corporation 53 

when  affidavit  on  information  sufficient 353 

AUCTIONEER, 

receiver  of,  when  entitled  to  funds  as  against  customer  .  .  155 
AUXILIARY  REMEDY, 

receivership  considered  as 6 

B. 

BANK,     (See  Corporations,  National  Banks.) 

creditor  not  entitled  to  receiver  where  remedy  at  law     ...  10 

insolvent,  governor  authorized  to  appoint  receiver     ....  39 

officer  of,  eligibility  as  receiver 72 

insolvency  of,  positive  affidavit  not  required     ..*....  89 

oath  to  receivers  of,  omission  does  not  vitiate  proceedings  .     .  99 

receiver  of,  right  to  sue  in  his  own  name 210 

need  not  be  made  party  to  suit  by  receiver  for  foreclosure  of 

mortgage 210 

trover  by  receiver  of,  for  conversion  of  bonds 212 

suit  begun  by,  continued  by  receiver 213 

need  not  be  party  to  foreclosure  suit  by  receivers 215 

defense  to  suit  by  receiver  of,  against  depositor 245 

set-off  in  suit  by  receiver  of,  on  notes 247,  24S 

suit  to  recover  notes  illegally  transferred  to  a  director,  counter- 
claim for  amount  paid  not  allowed 251 

failure  of,  when  receiver  liable  for  loss  of  funds 274 

receiver  of,  when  liable  to  pay  in  full 274  a 

to  pay  draft  or  check 274  a 


70i  INDEX. 

BANK  —  Continued.  Section 

receiver  of,  not  necessary  party  to  subsequent  proceedings  for 

another  receiver 291 

illegal  issue  of  notes,  receiver  to  take  charge  of  securities    .     .  293 

rights  of  action  of  receiver  of 817 

to  recover  against  stockholders 317  a 

against  president  of  bank 320 

for  unauthorized  transfer  to  director 320 

note  transferred  by  receivers  of,  assignee  may  recover  on    .     .  823 

contract  of,  after  insolvency,  receiver  may  decline  to  ratify     .  334 
insolvency  of,  when  insufficient,  on  information  and  belief,  to 

"warrant  receiver 346 

assets  of,  not  subject  to  attachment  after  receivership     .     .     .  348 

suit  against,  when  not  allowed  after  receivership      ....  350 

BANKRUPTCY, 

proceedings  in,  in  United  States  court,  when  subordinate  to  re- 
ceiver in  state  court 51,  52 

against  insolvent  corporation,  asserted  exclusively  ...  53 

appointment  of  receiver  over  partnership,  when  an  act  of  .     .  56 

assignee  of  partnership  in,  when  allowed  receiver     ....  57 
proof  of  debt  in,  made  by  receiver  of  corporation  in  another 

state 242 

of  railway  in  United  States  court,  will  not  interfere  with  pre- 
vious receiver  in  state  court         370 

discharge  in,  when  no  bar  to  receiver  on  creditor's  bill  .     .     .  425 

receiver  in  aid  of  proceedings  in 426 

receiver  to  collect  rents  in  aid  of 587 

of  executors,  ground  for  receiver 711 

BARRISTER, 

eligible  as  receiver 70 

as  member  of  parliament 70 

BENEFICE, 

of  clergyman,  receiver  over  rents  of 432 

BIDS, 

discretion  of  receiver  as  to  accepting 176 

BILL, 

necessary  to  granting  receiver 83 

need  not  contain  specific  prayer 83 

multifariousness  of,  no  objection  to  receiver 86 

may  be  dismissed  by  plaintiff,  although  receiver  appointed      .  101 

omission  of  prayer  for  receiver,  not  fatal 109, 110 

dismissal  of,  does  not  release  receiver  from  liability  ....  286 

not  demurrable  because  of  prayer  for  receiver 291 

when  receiver  continued  after  dismissal  of 437 


INDEX. 


T05 


BOND,    (See  Appeal  Bond.)  •  Section 

approval  by  clerk,  when  invalid 43 

usually  required  of  receiver  before  entering  upon  duties     .     .118 

two  sureties  required  under  English  practice 118 

effect  of  consent  to  dispense  with 118 

recognizance  of  receiver  alone,  when  sufficient 119 

dispensed  with,  when  unnecessary 120 

when  same  receiver  extended  to  different  actions     .     .     .  120 

title  not  acquired  until  receiver  executes 121 

failure  to  execute,  a  ground  of  nonsuit  in  action  by  receiver  .  121 

when  may  be  filed  nunc  pro  tunc 121 

informality  in,  effect  of  in  suit  by  receiver 121 

failure  to  require  as  part  of  final  decree,  no  ground  for  reversal  122 

by  defendant  to  account  as  receiver,  held  good 124 

liability  of  sureties  on 127-133 

sureties  strictly  held  to 127 

bond  may  be  vacated  as  to  one  surety 127 

practice  on  so  vacating 127 

when  liability  becomes  absolute 129 

when  action  will  lie  on 129 

suit  on  after  death  of  receiver 130 

liable  for  interest 131 

liable  for  costs  of  attachment  for  not  accounting      ...  131 

failure  to  execute,  effect  on  suit  by  receiver 227 

informality  in,  effect  on  suit  by  receiver 227 

by  corporation  in  lieu  of  receiver 308 

BONDHOLDERS,    (See  Mortgagees,  Railways.) 

of  railway,  granted  receiver  in  United  States  court,  notwith- 
standing subsequent  proceedings  in  state  court      ...  54 

receivers  in  aid  of 376-3S9 

grounds  for 370 

over  tolls  of  railway 381 

to  prevent  land  grant  from  lapsing 386 

on  application  for,  court  will  not  pass  on  validity  of 

bonds 387 

discharge  of  receiver 389 

of  municipal  corporation  secured  by  rates  and  assessments  de-  « 

nied  receiver 658 

of  canal  company  allowed  receiver  in  case  of  insolvency    .     .  678 

BOOK-KEEPER, 

of  corporation,  when  eligible  as  receiver 72 

BREWING, 

receiver  in  business  of,  his  functions  and  duties 549 

BRIDGE  COMPANY, 

receiver  over  tolls  and  francliise  of 300 

45 


70G  INDEX. 

c. 

CANAL  COMPANY,                                                                                 Section 
bondholders  of,  allowed  receiver  on  insolvency 678 

CAPITAL  STOCK.    (See  Corporations,  Subscriptions.) 

CARRIAGES, 

when  may  be  let  by  receiver 481 

CAR  TRUSTS, 

priorities  of,  in  railway  receiverships 394/ 

CATTLE, 

damages  for  killing,  not  enforced  in  state  court  against  receiver 
of  United  States  court 397 

CAVEAT  EMPTOR, 

applies  to  receiver's  sales 199  b 

CERTIFICATES.    (See  Railways,  Receiver's  Certificates.) 

CERTIORARI, 

appointment  of  receiver  not  reversed  on      .......      28 

CESTUI  QUE  TRUST.    (See  Trusts,  Trustees.) 

CHAMBERS, 

application  to  supply  vacancy,  may  be  made  in     .....     .      96 

CHANCELLOR, 

duty  of,  in  appointing  receiver  a  delicate  one 3 

CHATTELS, 

mortgagee  of,  receiver  as  against,  on  creditor's  bill    ....    420 

when  receiver  can  sustain  no  action  concerning  ....    467 

mortgage  of,  securing  rents,  when  receiver  entitled  to  .     .     .644 

when  receiver  appointed  as  to 647 

CHECK, 

when  not  entitled  to  payment  in  full 274  a 

CHOSE  IN  ACTION, 

construction  of  term  as  applied  to  insolvent  corporation     .     .  212 
of  corporation,  may  be  assigned  by  receiver  without  corporate 

seal 338 

of  debtor,  assignment  to  receiver  not  necessary 443 

title  to,  as  between  receiver  of  debtor  and  purchaser      ...  449 

of  partnership,  receiver  entitled  to 541 

CHURCH,    (See  Religious  Society.) 

possession  of,  by  receiver  protected  by  injunction      ....  140 

CLERGYMAN, 

receiver  to  collect  rents  of  benefice  of 432 


INDEX. 


707 


.  CLERK  OF  COURT,  Section- 

receiver  over  fees  of 22 

approval  of  bond  by,  invalid 43 

not  necessarily  a  receiver 71 

clerk  and  master  ordered  to  act  as  receiver 71 

liability  of  sureties  of,  when  clerk  appointed  receiver     .     .     .133  a 

CLOUD  UPON  TITLE, 

when  receiver  may  remove 454 

CODE  OF  PROCEDURE, 

of  New  York,  receiver  an  incident  to  general  jurisdiction  .     .  23 

receiver  in  creditor's  suit  under 401 

of  North  Carolina,  has  not  changed  general  equity  jurisdiction 

as  to  receivers 23 

COLLATERALS, 

deposited  by  corporation,  receiver  may  exercise  option  .     .     .  337 

COLLEGE, 

fellowship  in,  receiver  refused  over 311 

COLLIERY, 

receiver  as  between  tenants  in  common  of 606 

on  bill  by  purchaser  to  set  aside  purchase 615 

COMMERCIAL  PAPER, 

receiver's  possession  of,  not  that  of  bona  fide  holder  for  value  159 

refusal  to  deliver  notes  to  receiver,  when  not  a  contempt     .     .  168 

when  receiver  can  not  maintain  action  on  premium  note     .     .  204 

defense  to  suit  by  receiver  on  stock  subscription  note      .     .     .  205 

defense  to  suit  by  receiver  of  bank  on  note  of  depositor      .     .  245 
want  of  consideration  and  fraud,  when  not  available  in  defense 

of  suit  on  note  by  receiver 246 

set-off  in  suit  by  receiver  of  bank  on  notes 247 

in  suit  by  receiver  of  payee  against  maker 249 

counter-claim  allowed  for  services  rendered  receiver     .     .  249 

when  maker  can  not  set  off  judgment  against  receiver     .  252 

trover  for  conversion  of  note,  by  receiver  of  corporation    .     .  316 

canceled  note  for  insurance,  receiver  can  not  sue  on      .     .  319 

note  transferred  by  receiver  of  bank,  assignee  may  recover  on  323 

COMMON,    (See  Tenants  in  Common.) 

right  of,  not  to  be  exercised  against  receiver's  possession     .     .  154 
COMPENSATION  OF  RECEIVER, 

power  of  courts  to  fix 781 

English  practice,  no  settled  rule 782 

referred  to  master 782 

considerations  influencing 782 

no  fixed  rule  in  this  country 783 


70S  INDEX. 

COMPENSATION  OF  RECEIVER  —  Continued.  Section. 

should  correspond  with  capacity  and  responsibility    ....  783 

Massachusetts  doctrine 784 

percentage  not  allowed 784 

when  court  will  refuse  to  pass  on  exceptions  to  master's 

report '84 

in  Maryland  same  as  on  trustee's  sales 784 

in  Alabama  same  percentage  as  guardians 785 

in  New  York  same  rate  as  executors 785 

but  courts  not  bound  by '85 

receivers  in  lieu  of  executors  allowed  same  compensation  .     .  786 

receiver  of  railway  allowed  more  liberal  compensation  ...  787 

considerations  in  determining 787 

entitled  to,  though  work  performed  by  others 788 

commissions  on  receipts  and  disbursements 788 

rests  in  accounts '89 

extra  compensation  for  foreign  journeys  refused 790 

receiver  of  insurance  company  allowed  commissions  on  notes 

surrendered '91 

payment  into  court  to  avoid 792 

extra  remuneration  for  survey  of  minor's  estate  not  allowed  .  793 

receiver  entitled  to,  unless  otherwise  ordered 794 

when  appointed  by  consent '94 

plaintiff  partner  not  entitled  to,  when  appointed  receiver    .     .  795 

receiver  can  not  take  judgment  for,  against  parties,  on  motion  796 

practice  in  fixing '96 

may  be  taxed  as  costs '96 

when  part  taxed  as  costs  against  unsuccessful  plaintiff  .     .     .  796 

when  chargeable  on  fund '96 

right  of  receiver  to  appeal '96 

when  deprived  of ,  for  delay  in  payment 818 

when  allowed,  though  receiver  has  delayed  accounting  .     .     .  818 

COMPROMISE, 

receiver  in  possession  continued  pending     ....     j     ..  564 
COMPTROLLER  OF  THE  CURRENCY.    (See  National  Banks.) 

CONSENT, 

receiver  not  appointed  by,  in  improper  case 7 

appointed  by,  under  Irish  practice 94 

CONTEMPT  OF  COURT, 

bv  receiver  of  United  States  court  interfering  with  receiver  of 

state  court ol 

interference  with  receiver's  possession  punishable  by  attachment  163 

interference  by  subsequent  receiver  punishable  as  a  .     .     .     .  164 

by  garnishing  funds  due  receiver       164 

not  justifiable  because  of  impropriety  of  appointment  ...  165 


INDEX. 


709 


CONTEMPT  OF  COURT  —  Continued.                                              Section 
liability  for,  not  dependent  on  official  or  formal  notice  of  ap- 
pointment       166 

in  interfering  with  collection  of  rent  by  receiver  ....  167 
by  defendant  in  refusing  to  surrender  property  to  receiver  .  168 
refusal  to  deliver  possession  to  receiver,  when  not  a  contempt  .     168 

court  itself  only  competent  judge  as  to 169 

resistance  to  enforcement  of  order  for  receiver  in  foreign  coun- 
try constitutes  a 170 

actual  disturbance  of  receiver's  possession  requisite  to     .     .     .     171 

levy  and  sale  by  sheriff  considered 171 

proceedings  for,  receiver's  title  not  determined  in     ...     .     172 

when  claimant  required  to  restore  property 172 

courts  averse  to  punishment  for,  as  between  different  receivers  173 
in  interfering  with  receiver's  rights  under  patent  .  .  .  174  a 
suit  against  receiver  without  leave  of  court,  constitutes  a  .     •     254 

refusal  of  receiver  to  pay  money  constitutes  a 2S0 

appropriation  of  money  by  receiver  constitutes  a      .     .     .     •     280 
CONTRACT, 

by  receiver,  court  may  vacate  or  modify 186 

persons  making  chargeable  with  notice 186  a 

for  public  works,  receiver  of,  refused 702 

CONVEYANCE.    (See  Deed.) 

CORPORATIONS, 

governor  authorized  to  appoint  receiver  over  insolvent  bank     .  39 

positive  affidavit  not  required 89 

receiver  of,  how  recognized  in  other  state 47 

insolvent,  exclusive  jurisdiction  asserted  by  United  States  courts 

in  bankruptcy 53 

selecting  receiver  of,  officer  ineligible 72 

eligible  by  statute 72 

another  corporation  eligible 73 

stockholder  and  director  ineligible 80 

oath  to  receivers  of,  omission  does  not  vitiate  proceedings  .     .  99 

shares  of  stock  of,  when  receiver  improper  before  answer  .     .  106 

insolvent,  notice  necessary  before  appointment  of  receiver       .  115 

receiver  of,  not  subject  to  garnishment 151 

suit  by  receiver  of,  on  stock  subscription  note,  what  defense 

available 205 

judgment  in  one  state,  a  bar  to  subsequent  action  in  another  206 

must  be  in  corporate  name 209 

receivers  of  bank,  suit  in  their  own  name 210 

may  be  in  name  of  receiver  when  authorized  by  statute     .  211 
corporation  can  not  recover  in  its  own  name  when  right  of 

action  vested  in  receiver 211 


710  INDEX. 

CORPORATIONS  —  Continued.  Section 

suit  by  receiver  of,  suit  begun  by  corporation,  continued  by 

receiver 213 

wben  defendant  can  not  object  to  irregularities  in  appoint- 
ment   225 

not  maintainable  in  other  states 240 

allowed  in  other  states  on  principles  of  comity     ....  241 
receiver  of  corporation  allowed  to  prove  debt  in  bankruptcy 

in  another  state 242 

set-offs,  what  admissible 247,  248 

against  shareholder  for  illegal  dividends,  set-off  not  al- 
lowed        250 

foreclosure  of  mortgage  given  by,  when  receivers  need  not  be 

made  defendants 260 

action  against,  not  abated  by  appointment  of  receiver    .     .     .  260 

when  receivers  should  be  made  defendants 260 

receivers  over,  principles  governing  the  relief        ....  287-312 

jurisdiction  enlarged  by  statute 287 

not  appointed  under  general  equity  powers 288 

courts  proceed  cautiously 289 

construction  of  statutes  conferring  the  power      ....  289 

not  necessarily  result  of  injunction 289 

corporation  must  be  party  and  before  the  court  ....  290 
receiver  of  bank  need  not  be  made  party  to  subsequent 

proceedings  for  another  receiver 291 

general  allegations  of  fraud  insufficient 292 

should  not  be  appointed  in  absence  of  fraud  or  danger  to 

property 292 

failure  of  corporation  to  act 293 

breach  of  trust  by  officers 293 

no  place  of  business  and  no  officers 293 

illegal  issue  of  bank  notes 293 

courts  interfere  cautiously  in  behalf  of  shareholders     .     .  294 
when  refused  in  behalf  of  shareholder  on  ex  parte  appli- 
cation       294 

former  shareholder  not  entitled  to 294 

acquiescence  or  laches  of  shareholder  bar  to 295 

when  relief   determined  by  legislation  and  decisions  of 

other  state 296 

refused  as  to  new  issue  of  stock  ratified  by  state  where 

company  incorporated 296 

under  statute  on  expiration  of  charter 297 

sequestration  for  benefit  of  creditors 297 

rights  of  attaching  creditors  subordinate       ....  297 

right  of  judgment  creditors  to,  under  statute       ....  29S 


INDEX. 


711 


CORPORATIONS  —  Continued.                                                           Section- 
receivers  over,  judgment  creditor  may  file  bill  for,  after  exe- 
cution returned  unsatisfied 299 

creditors  share  alike  in  funds  realized  by 299 

judgment  creditor  may  have,  over  tolls  and  franchise  of 


bridge  company 


300 


creditor  without  judgment  can  not  have 301 

can  not  have  when  remedy  at  law 301 

effect  of,  on  judgment  lien 302 

does  not  divest  title  to  real  estate  in  limine 302 

does  not  dissolve  corporation 302 

on  dissolution,  real  estate  vests  in  receiver 303 

mismanagement  of  trust  funds  of  insurance  company, 

ground  for 304 

insolvency  and  assignment 304 

foreign  corporations,  receivers  over  in  behalf  of  creditors 

in  New  York 305 

receivers  in  behalf  of  shareholders 306 

not  allowed  before  judgment  of  forfeiture  in  quo  war- 
ranto         307 

bond  in  lieu  of 308 

case  retained  for  accounting 308 

no  bar  to  suit  against  shareholder  for  subscription  .     .     .  309 

registration  of  shares  in  hands  of 310 

not  allowed  over  dividends  of  college  fellowship       .     .     .  311 

one  corporation  may  be  receiver  over  another       ....  312 

duty  of  officers  to  deliver  assets  to  receiver 312  a 

functions,  duties  and  rights  of  action  of  receivers  over  .     .  313-342 

legislative  enactments 313 

receiver  represents  both  creditors  and  shareholders  .     .     .  314 

represents  corporation  for  purposes  of  litigation       .     .     .  315 

may  not  plead  usury  when  corporation  could  not     .     .     .  315 

may  purchase  at  mortgage  sale 315  a 

may  prosecute  or  defend  suits 315  a 

rights  of  action  of 316 

succeeds  to  rights  of  action  of  corporation 316 

may  enforce  tliem  by  same  remedies 316 

may  maintain  trover  for  conversion  of  note 316 

may  enforce  all  securities  for  payment  of  debts  ....  316 

of  receiver  of  insolvent  bank 317 

individual  liability  of  stockholders 317  a 

not  changed  by  receiver's  appointment 318 

same  defenses  available  as  in  suit  by  corporation      .     .     .  31S 

defense  to  suit  by  receiver  on  premium  note 318 

change  of  corporate  name 318 


712  INDEX. 

CORPORATIONS  —  Continued.  Section 

rights  of  action  of,  can  not  litigate  questions  determined  against 

corporation 318 

can  not  avoid  lawful  settlement  made  by  corporation  .     .  319 

can  not  sue  on  canceled  note  given  for  insurance     .     .     .  319 

not  bound  by  illegal  act  of  corporation 320 

may  maintain  suit  to  set  aside  illegal  transfer  of  securities  320 
may  maintain  suit  against  president  of  bank  for  money 

fraudulently  disposed  of 320 

unauthorized  transfer  of  notes  of  bank  to  director  .     .     .  320 

counter-claim  disallowed 320 

may  recover  dividends  improperly  paid 321 

functions  and  powers  conferred  by  statute 322 

power  to  dispose  of  and  divide  assets 323 

presumed  to  have  properly  discharged  duty      ......  323 

right  of  action  to  recover  subscription  to  capital  stock    .     .     .  324 

rule  in  different  states 324 

defenses  to  such  actions 324  a 

shareholder  not  entitled  to  injunction  against      ....  325 

fraud  no  defense  to,  when  all  parties  participated     .     .     .  325 

right  of  action  to  recover  assessments  on  premium  notes     .     .  326 

what  receiver  must  allege  and  prove 327 

liability  not  increased  by  receivership 328 

must  make  assessment  and  apportionment      .....  328 

receiver  takes  place  of  directors 329 

;                sanction  and  approval  of  court 329 

not  a  judicial  act 330 

receiver  may  make  new  assessment 330 

form  of  assessment,  and  proof  required 331 

receiver  may  sue  on,  to  pay  equitable  claims 332 

what  defense  denied  maker 332 

set-offs,  what  may  be  allowed  by  receiver 333 

not  allowed  in  action  to  recover  illegal  dividends      .     .     .  333 

discretion  of,  in  settling  claims  against  corporation  ....  334 
may  decline  to  ratify  contract  made  by  corporation  after 

insolvency 334 

can  not  waive  express  stipulations  of  insurance  policy  .     .  334 

can  only  allow  demands  recoverable  by  suit 335 

duty  to  resist  allowance  by  referees 335 

may  be   authorized   by   court   to    compromise    doubtful 

claims 336 

may  allow  officers  salaries  pro  rata 336 

may  exercise  option  of  treating  deposit  of  collaterals  as 

payment 337 

may  assign  chose  in  action,  without  seal 338 


INDEX. 


fl3 


COKPOEATIONS  —  Continued.  Section 

sale  by,  effectual  without  seal 338 

not  set  aside  because  applied  for  by  creditor  who  was  also 

judge  of  the  court 333 

suit  by,  when  defendant  entitled  to  costs 339 

action  against,  to  collect  tax,  how  judgment  entered      .     .     .  340 

suit  by,  against  debtor,  not  act  of  bankruptcy 341 

on  bill  by  judgment  creditors  against,  not  required  to  apply 

money  on  judgments 342 

receivers  over  insolvent  corporations,  jurisdiction  enlarged  by 

statute 343 

power  may  be  conferred  on  executive  officers      ....  343 

primary  object  to  preserve  the  assets 344 

discretionary  with  court  whether  to  allow  corporation  to 

resume  management 3-14 

right  to  appoint  unquestioned 345 

.  appointment  of,  pending  proceedings  for  forfeiture,  does 

not  revive  corporate  body 345 

what  allegations  necessary  as  to  insolvency 346 

when  affidavit  on  information  and  belief  insufficient  to 

warrant 346 

not  appointed  ex  parte        34»"> 

practice  on  appointing 346 

shareholders  entitled  to  relief 346  a 

fraudulent  transfers 346  a 

discretion  of  court  in  management 346  a 

injunction  as  adjunct  of 347 

does  not  necessarily  follow  injunction 347 

lien  of  creditors  not  affected  by 348 

does  not  dissolve  attachment  of  assets 348 

assets  can  not  be  attached  after  appointment  of  ...     .  348 

does  not  prevent  creditors  from  suing 349 

when  creditor  can  not  sue  after 350 

other  creditors  may  come  in 350 

appointment  of,  operates  as  transfer  of  property      .     .     .  351 

right  to  rents  as  affected  by 351 

creditors  not  allowed  to  sue  for  unpaid  subscriptions  after 

appointment  of 352 

application  by  attorney -general  for,  under  statute     .     .     .  353 

affidavit  on  information  sufficient 353 

when  corporate  officers  competent  as 354 

effect  of  corporate  answer  under  seal 355 

purchaser  from,  acquires  no  right  of  action  against  former 

officer 356 

when  shareholder  estopped  from  questioning  appointment 

of,  or  order  for  sale 356 


714  INDEX. 

CORPORATIONS  —  Con  tinned.  Section 

receivers  over  insolvent  corporations,  when  discharged  on  solv- 
ency of  corporation 357 

not  when  rights  of  other  creditors  have  intervened     .     .  357 

national  banks,  receivers  over 358-643 

power  vested  in  comptroller  of  the  currency 358 

effect  of 358 

title  acquired  by 359 

not  entitled  to  notes  pledged  by  bank 359 

assets  exempt  from  taxation 359 

regarded  as  agent  of  comptroller 360 

has  no  control  over  bonds  deposited  to  secure  currency     .  360 

rights  of  action  of 360 

power  to  contract 360 

may  enforce  individual  liability  of  shareholders       .     .     .  360  a 

suits  by,  what  must  be  averred 361 

what  must  be  proven 361 

power  of  comptroller  to  appoint,  does  not  exclude  jurisdic- 
tion of  equity 362 

judgment  creditor  may  have        362 

state  court  has  no  jurisdiction  over 363 

property  in  hands  of,  can  not  be  sold  by  creditor      .     .     .  364 

railways,  receivers  over f 365 

principles  governing 365-375 

in  behalf  of  mortgagees  and  bondholders 376-389 

functions  and  duties  of 390-394 

equitable  mortgagee  of  private  corporation  allowed  receiver    .  659 

official  Liquidator  appointed 659 

COSTS, 

of  attachment  against  receiver  for  not  accounting,  sureties 

liable  for       131 

habihty  of  receiver  for 229 

receiver  not  entitled  to,  when  he  has  not  obtained  leave  to  de- 
fend       267 

in  suit  by  receiver  of  corporation,  when  defendant  entitled  to  339 

on  motion  for  tenants  to  attorn  to  receiver 620 

allowance  of,  in  receiver's  accounts 809-812 

of  appointment,  entitled  to  priority 809 

when  receiver  required  to  pay 809 

of  new  appointment 809 

of  unauthorized  or  improvident  litigation 811 

for  appearing  on  motion  for  discharge 812 

when  receiver  may  move  for        812 

CO-TENANT,    (See  Tenants  in  Common.) 

of  personalty,  courts  averse  to  granting  receiver       ....  20 


INDEX. 


715 


COUNSEL,  Section 

receiver  entitled  to  and  should  obtain 188 

employment  of,  by  receiver,  should  not  employ  counsel  of  par- 
ties       216 

limitation  upon  the  rule 217 

not  ground  for  removal 823 

services  of,  to  corporation 351 

fees  of 805-808 

receivers  entitled  to  payments  of 805 

employment  should  be  authorized 805 

not  allowed  for  unsuccessful  defense 805 

defending  fraudulent  appointment 805 

when  allowed  for  defending  motion  for  removal      .     .     .  805 

allowed  receiver  of  lunatic's  estate        805 

fees  to  counsel  for  parties,  when  disallowed 800 

when  allowed 80G 

services  by  receiver  as  solicitor  for  administrator      .     .     .  807 

receiver  not  allowed  counsel  fees  paid  himself     ....  808 

COUNTER-CLAIM, 

allowed  for  services  rendered  to  receiver 249 

in  suit  for  notes  illegally  transferred,  amount  paid  for  notes 
not  allowed  as  a 251 

COURTS,    (See  Contempt  of  Court,  United  States  Courts.) 

exercising  the  jurisdiction        40-50 

receivers  originated  in  English  Chancery 40 

favorite  remedy  in  Irish  Chancery 40 

what  courts  grant  receivers  in  tins  country 41 

of  original  jurisdiction 41 

of  last  resort 41 

of  probate,  not  vested  with  the  jurisdiction 42 

when  may  appoint 42 

appointment  by,  required  in  term  time 43 

property  need  not  be  within  jurisdiction  of 44 

ecclesiastical  courts,  receiver  pending  contest  in 46 

of  different  states,  receivers  of,  recognized  only  by  comity      .  47 

first  appointing  has  exclusive  control 48 

of  New  York,  when  injunction  bars  receiver 40 

relative  powers  of  state  and  federal 50-63 

first  acquiring  jurisdiction  retain    it 50 

priority  acquired  by  receiver  on  creditor's  bill  in  state  court     .  51 

contempt  of  state  court  by  receiver  of  United  States  court       .  51 

federal,  generally  recognize  prior  jurisdiction  of  state  courts  .  52 

the  same  in  bankruptcy  proceedings 52 

federal,  exclusive  jurisdiction  asserted 53.  54 


716  INDEX. 

COURTS  —  Continued.  Section 

state,  will  not  act  in  foreclosure  when  receiver  of  United 

States  court  in  possession 54 

federal,  will  not  entertain  bill  for  account  against  receiver  of 

state  court 55 

state  and  federal,  conflict  between  as  ground  for  receiver    .     .  58 
state,  can  not  enforce  payment  by  receiver  of  United  States 

court       .' 59 

right  to  entertain  action  against  receiver  of  United  States 

court GO 

will  not  grant  writ  of  assistance  against  receiver  of  United 

States  court 01 

inferior,  discretion  in  selecting  receiver  rarely  interfered  with  G5 

grounds  of  interference 65 

may  be  interfered  with  to  prevent  injury  and  expense       .  GG 

clerk  of,  not  ex  officio  a  receiver 71 

when  application  must  be  made  in 96 

of  state,  no  jurisdiction  over  receiver  of  national  bank  .     .     .  363 
receiver  of  railway  in  state  court,  when  not  interfered  with  by 

proceedings  in  bankruptcy  in  United  States  court       .     .     .  370 
of  state,  can  not  enforce  judgment  against  receiver  of  railway 

in  United  States  court 397 

COVENANT, 

by  receiver  officially,  no  personal  liability 273 

of  person  over  whom  receiver  is  appointed,  receiver  not  liable 

for 273 

CREDITORS,    (See  Judgment  Creditors.) 

not  entitled  to  receiver  of  debtor's  property  before  judgment  .  406 

of  bank,  denied  receiver  where  remedy  at  law 10 

when  allowed  receiver  in  probate  court 42 

when  jurisdiction  first  acquired  by  federal  court  on  creditor's 

bill 50 

when  by  state  court 51 

receiver  in  aid  of,  prior  jurisdiction  of  state  court  paramount  51 

rehearing,  when  not  granted  in  creditor's  suit 92 

receiver  in  behalf  of,  may  be  extended  to  other  creditors    .     .  93 

receivers  usually  granted  before  answer  on  creditors'  bills  .     .  105 
receiver  extended  to  actions  by  different  creditors,  need  not 

give  new  security 120 

priority  between  receiver  and  judgment  creditor  levying  after 

appointment  of  i-eceiver 136 

equities  of,  should  be  stated  by  receiver  suing  for      ....  234 

suit  by  receiver  for,  when  set-off  not  allowed 250 

on  notes  due  debtor,  set-off  refused 252 

right  of,  to  receiver  over  corporation,  statute  strictly  construed  289 


INDEX. 


[17 


CREDITORS  —  Continued.  Section 

of  corporation,  right  to  receiver  given  by  statute 298 

may  file  bill  for  receiver  after  execution  unsatisfied       .     .     299 
may  have  receiver  over  tolls  and  franchise  of  bridge  com- 


pany 


300 


can  not  have  receiver  without  judgment 301 

where  remedy  at  law 301 

lien  of,  not  divested  by  receiver  in  limine       ....  302,  348 

foreign  corporation  may  have  receiver  in  New  York     .     .  203 

bond  allowed  in  lieu  of  receiver 308 

receiver  represents  both  creditors  and  shareholders  .     .     .  314 

not  prevented  from  suing  by  receivership 349 

may  come  in  under  decree 350 

of  national  bank,  may  have  receiver 362 

of  railway,  not  entitled  to  receiver  when  judgment  can  be  en- 
forced by  ordinary  means 365 

not  entitled  to  priority  over  previous  mortgages  ....  382 

before  judgment,  not  usually  allowed  receiver 406 

exception  in  partnership  cases 407 

in  case  of  lien  on  vessel 408 

in  action  to  charge  property  of  married  woman  with 

her  debts 409 

annuitant  allowed  receiver  when  annuity  in  arrears  ....  410 

receiver  over  real  estate  in  aid  of 418 

receiver  in  aid  of,  under  English  bankrupt  law 426 

of  partnership,  allowed  to  proceed  at  law  notwithstanding  re- 
ceivership      505 

when  entitled  to  receiver  against  surviving  partner       .     .  537 

when  granted  receiver  on  bill  to  charge  debtor's  realty  .     .     .  567 
CREDITORS'  BILLS.    (See  Judgment  Creditors.) 

CROPS, 

ungathered,  when  receiver  refused 590 

when  allowed 590 

receiver  of,  when  mortgagee  entitled  to 646,  670 

not  entitled  to  severed  crops 646 

CURTESY,..  ESTATE  BY, 

receiver  of,  debtor  takes  title  to «     •     •     •     •  451 

CUSTODIANS, 

of  funds  in  litigation,  when  similar  to  receivers 182 

D. 

DANGER, 

of  loss,  as  ground  for  receiver 11 

to  the  fund  in  litigation,  as  ground  for  relief 34 

ground  for  receiver  before  answer 105 

to  rents  and  profits,  as  ground  for  receiver  over  realty  .     .     .  559 


71S  INDEX. 

DEATH,  Section 

of  parties  or  of  receiver,  effect  of 471  a 

of  partner,  as  ground  for  receiver 530-537 

receiver  on  death  of  both  partners 530 

not  granted  against  stu-vivor  except  for  misconduct      .     .  531 

mismanagement  by  survivor,  ground  for 532 

refusal  by  survivor  to  close  up  business,  ground  for      .     .  532 

when  administrator  of  deceased  may  have 533 

rights  and  functions  of  the  receiver ,  534 

when  legatee  continuing  business  entitled  to 535 

appointed  notwithstanding  death  of  partner 530 

may  sue  for  money  due  firm 530 

when  appointed  on  bill  by  creditors  against  survivor     .     .  537 

of  trustee,  as  ground  for  receiver 094 

of  executor,  as  ground  for  receiver 718 

DECREE, 

not  prejudiced  by  decision  on  application  for  receiver     ...  0 

probability  as  to,  considered  on  application  for  receiver       .     .  8 

interlocutory,  no  appeal  from 20 

rule  in  Michigan 27 

final,  receiver  may  be  appointed  as  part  of 109 

receiver  may  be  appointed  after 110 

failure  to  require  bond,  no  ground  of  reversal     ....  122 

when  does  not  operate  as  discharge 834 

of  foreclosure,  receiver  appointed  after,  in  case  of  emergency  .  055 
DEED, 

by  receiver,  power  to  make  implied  from  power  to  sell  .     .     .  190 

confirmation  of,  by  court 199 

deposit  of,  as  security,  when  receiver  allowed 058 

DEED  OF  TRUST.    (See  Trust  Deed.) 
DEFINITION, 

of  receiver \ 

DEMURRER, 

to  bill,  no  objection  to  appointment  when  defendant  does  not 

appear 95 

when  sustained  for  want  of  proper  parties 010 

DETINUE, 

action  of,  may  be  maintained  by  receiver 218 

DEVISEE, 

not  entitled  to  receiver  over  realty  when  remedy  at  law      .     .  555 

bill  by,  to  determine  widow's  dower,  receiver  refused     .     .     .  508 

contest  between,  and  heir,  when  receiver  refused       ....  570 

when  granted 570 

DILIGENCE, 

required  of  plaintiff 14 


INDEX. 


'ID 


DISCHARGE,    (See  Removal.)  Section 

of  receiver,  on  answer  denying  equities  of  bill 24 

no  bar  to  suit  against  him  by  claimant  of  property       .     .     268 

of  corporation,  when 3o7 

of  railway,  on  payment  of  mortgage 389 

in  bankruptcy,  when  no  bar  to  receiver  on  creditor's  bill     .     .     425 

of  receiver 832-848 

power  of  court 820 

receiver  discharged  when  necessity  terminates    ....     832 

in  case  of  lunatic's  estate 832 

effect  of  termination  of  suit 833 

does  not  necessarily  follow  termination  of  suit   ....     833 

when  final  decree  does  not  operate  as 834 

receiver  over  infants  not  discharged  on  one  coming  of  age    385 

receiver  can  not  appeal  from 836 

party  can  not  appeal  from 836 

punished  for  contempt  in  failing  to  comply  with  .  .  .  836 
defendant's  right  to,  on  satisfying  plaintiff's  demand    .     .     837 

plaintiff  not  entitled  to,  before  accounting 837 

receiver  not  entitled  to,  as  of  course,  on  his  own  application    838 

when  mortgagee  may  apply  for 839 

absolute  right  to,  on  payment  of  mortgage  debt.  .  •  .  840 
granted  when  corporation  able  to  resume  business  .  .  .  841 
granted  on  denial  by  answer  of  allegations  of  creditor's 

bill 842 

granted  on  plaintiff's  delay 843 

putting  purchaser  of  lands  in  possession  equivalent  to  .     .     844 

granted  on  bankruptcy  of  receiver 845 

payment  by  defendant 846 

right  of  defendant  to  move  for 846 

receiver  need  not  appear  on  hearing 846 

order  for,  not  appealable  in  Michigan 847 

no  bar  to  action  against  receiver  for  liabilities  incurred      .     848 

DISCRETION, 

appointment  of  receiver  rests  in 7 

where  there  is  doubt  as  to  plaintiff's  recovery 8 

where  defendant  is  in  possession 19 

when  not  interfered  with  on  appeal 25 

of  master  in  chancery  in  selecting  receiver,  courts  averse  to 

interference  with 64 

of  inferior  court  in  selecting  receiver,  rarely  interfered  with 

by  appellate  court 65 

grounds  of  interference  with 65 

of  receivers  in  managing  property 176 

in  accepting  or  rejecting  bids 176 


T1(J  IXDES. 

DISCRETION  —  Continued.  Section 

of  receivers,  none  in  application  of  funds 178 

as  to  sale  by  bulk  or  in  parcels 198 

of  court,  in  continuing  receiver  over  corporation  .     .  ,  .     .     .     344 

of  receiver  of  railway,  as  to  expenditures 392 

of  court,  in  staying  sale  by  receiver 429 

in  limiting  quantity  of  debtor's  estate  over  which  to  ap- 
point receiver 429 

DISSOLUTION, 

of  partnership,  as  ground  for  receiver 509-521 

DISTRAINT.    (See  Rent.) 

DIVERSION, 

of  income  of  railway,  ground  for  preferring  current  debts       .  894  c 

DIVIDEND, 

receiver  can  not  make,  without  order  of  court 175 

by  insolvent  insurance  company,  receiver  may  recover  back    .  321 

creditors  enjoined  from  suing  for 321 

set-offs  not  allowed 333 

DIVORCE, 

receiver  of  rents  pending  action  for 146 

suit  by  receiver  to  set  aside  fraudulent  conveyance  made  to  de- 
feat decree  for  alimony 221 

receiver  in  proceedings  to  enforce  alimony 433 

receiver  over  husband  pending,  does  not  divest  partnership 
property 548 

DOWER, 

receiver's  sale  subject  to 199  a 

when  receiver  granted  concerning 568 

DRAFT, 

when  not  entitled  to  payment  in  full 274  a 

DUTY,    (See  Functions.) 

of  chancellor  in  appointing  receiver,  delicate  nature  of  .     .     .        3 

of  receiver,  over  railway 390 

in  partnership  cases 538-552 

E. 

KASEMENT, 

of  railways  in  tunnel,  receiver  for  management  of    .     .     .     .    868 

ECCLESIASTICAL  COURTS, 

receiver  pending  contest  in       . 46 


ETOEX.  721 

EJECTMENT,  Section 

can  not  be  brought  against  receiver  without  leave     ....  139 

permission  to  bring,  receiver  not  allowed  to  apply  for     .     .     .  181 

leave  of  court  necessary  before  receiver  can  bring     ....  208 

against  receiver,  leave  to  defend 266 

receivers  in  aid  of 575-577 

not  usually  granted 575 

granted  to  preserve  rents  and  profits 576 

stronger  ground  after  verdict  in 577 

granted  pending  certiorari  from  state  to  federal  court  .     .  577 

ELIGIBILITY, 

to  office  of  receiver G3-81 

as  affected  by  relationship 07 

by  interest  with  defendant 68 

of  solicitor 68 

person  unfamiliar  with  property  not  eligible 68 

distant  residence  as  affecting 69 

solicitor,  under  commission  of  lunacy,  ineligible 70 

in  the  cause,  ineligible 70 

master  in  chancery  ineligible 70 

barrister  eligible 70 

as  affected  by  being  member  of  parliament 70 

peer  of  the  realm  ineligible 70 

of  receiver  of  corporation,  officer  ineligible 72 

officer  eligible  by  statute 72 

another  corporation  eligible 73 

stockholder  and  director  ineligible 80 

of  trustees  as  receivers,  generally  ineligible 74 

when  trustee  and  executor  eligible 74 

next  friend  of  infant  ineligible 75 

mortgagee  and  trustee  eligible 76 

administrator  of  deceased  partner  eligible 78 

nomination  in  the  bill 79 

nomination  by  consent  of  parties 79 

mortgagee  of  West  India  estates  eligible 81 

ENGLISH  CHANCERY, 

receivers  originated  in 40 

ESTOPPEL, 

of  defendant,  from  denying  receiver's  right  to  sue  in    that 

capacity 235 

of  judgment  creditor  estops  receiver 4o6 

EXAMINATION, 

of  judgment  debtor  before  master 415 

46 


722 


INDEX. 


EXCEPTIONS,  Section 

to  master's  selection  of  receiver,  rarely  entertained   ....  64 

grounds  of  entertaining 64 

English  practice  on 90 

EXCLUSION, 

from  partnership,  as  ground  for  receiver 523-529 

EXECUTION, 

appointment  of  receiver  an  equitable .     .  2,  5 

unauthorized  levy  of,  on  property  held  by  receiver,  a  contempt 

of  court 163 

not  justifiable  on  ground  of  illegal  or  unauthorized  appoint- 
ment      165 

return  of  nulla  bona  before  return  day,  no  ground  for  receiver 

on  creditor's  bill 404 

levy  of,  on  partnership  property,  how  affected  by  receivership  .  495 

realty  subject  to  hen  of,  on  termination  of  receivership  .     .     .  602 

EXECUTORS, 

receiver  pending  contest  between 46 

when  eligible  as  receivers 74 

receiver  granted  against,  before  answer  in  case  of  abuse  of  trust  104 

receiver  granted  against,  after  decree 110 

assignment  of  mortgage  by,  as  security  for  receivership,  held 

good 125 

receivers  over 706-724 

courts  averse  to  granting 706 

relief  based  on  doctrine  of  quia  timet 706 

not  allowed  on  slight  ground 707 

on  information  and  belief 707 

abuse  of  trust  and  waste,  ground  for 708 

allowed  before  answer 708 

poverty  of,  no  ground  for 709 

insolvency  and  misconduct  ground  for 710 

bankruptcy  ground  for Til 

removal  from  state  ground  for 712 

allowed  though  estate  in  foreign  country 713 

executors  in  foreign  country 713 

allowed  pending  controversy  in  ecclesiastical  court  .     .     .  714 

judgment  creditors,  when  allowed  receiver  against       .     .  715 

when  denied  receiver 716 

not  allowed  to  interfere  with  administration 716 

death  and  refusal  to  act  ground  for 718 

misunderstanding  between,  not  sufficient 718 

allowed  over  realty  when  plaintiff  equitably  interested 

with  deceased 719 


INDEX.  i--> 

EXECUTORS  —  Con  t  in  tied.  Section 

receivers  over,  court  will  not  examine  executor's  account  on 

application  for  receiver 720 

on  removal  of  receiver  executors  again  ordered  to  act  .     .  723 

appointment  of  receiver  does  not  remove  executor  .     .     .  724 

of  receiver,  not  ordered  to  account 817 

when  entitled  to  petition  for  account  of  payments    .     .     .  817 

EXEMPTIONS, 

receiver  in  creditor's  suit  takes  no  title  to  exempted  property    .  441 

nor  to  insurance  on 442 

nor  to  judgment  for  damages  for  seizing 442 

EXTRAORDINARY  REMEDY, 

receivership  considered  as 3 

of  receiver  as  compared  with  injunction 10 

F. 

FARM, 

partnership  in,  when  receiver  granted 504 

compensation  of  receiver  of 788 

FEDERAL  COURTS.    (See  Courts,  United  States  Courts.) 

FEES, 

of  office,  receiver  refused 21 

when  granted 22 

FELLOWSHIP.    (See  College.) 

FINAL  DECREE.    (See  Decree.) 

FORCIBLE  ENTRY  AND  DETAINER, 

can  not  be  brought  in  receiver's  name 209 

contrary  doctrine  recognized 210 

FORECLOSURE.    (See  Mortgages,  Trust  Deed.) 

FOREIGN  CORPORATIONS.     (See  CORPORATIONS.) 

FOREIGN  COUNTRY, 

receivers  over  property  in 44 

receiver  to  enforce  decree  in 45 

contempt  for  resisting  enforcement  of  order  for  receiver  in     .  170 

mortgaged  property  in,  receiver  allowed 648 

FRANCHISE, 

of  bridge  company,  judgment  creditor  may  have  receiver  over    300 

FRAUD, 

prevention  of,  as  ground  for  receiver 11 

general  allegations  of,  insufficient 17 

ground  for  receiver  before  answer 105 

as  defense  to  suit  by  receiver  on  stock  subscription  note     .     .  205 


72-i  rsDEX. 

FRAUD  —  Continued.                                                                                   Section 
general  allegations  of ,  insufficient  to  warrant  receiver  over  cor- 
poration     292 

plaintiff's  participation  in,  bars  relief 295 

in  obtaining  real  property,  when  ground  for  receiver     .     .     .  565 

FUNCTIONS,    (See  Sales,  Suits.) 

of  receiver,  effect  of  appeal 29 

as  affected  by  supersedeas 29 

not  allowed  to  pay  money  except  by  order  of  court       .     .  142 

general  nature  of 175-190 

receiver  can  make  no  dividend  without  order      ....  175 

receiver  not  an  assignee 175 

not  plaintiffs  agent,  but  represents  all  parties     ....  175 

may  employ  assistants  in  business 175 

discretion  as  to  management  of  property 176 

as  to  accepting  bids 176 

no  discretion  in  application  of  funds 178 

must  obey  all  orders  of  court  as  to  settlement  of  demands  177 
can  not  set  off  personal  claims  against  person  to  whom  he 

is  ordered  to  refund  money 178 

enlargement  of 179 

repairs  made  by  receiver,  rule  as  to 180 

receiver  not  allowed  to  originate  proceedings  under  En- 
glish and  Irish  practice 181 

of  custodians  of  funds  in  litigation,  when  similar  to  re- 
ceivers      182 

receiver  attending  court  exempt  from  arrest       ....  183 

effect  of  receivership  as  regards  statutes  of  limitations       .  184 

functions  not  determined  by  abatement  of  cause      .     .     .  1 85 

may  collect  rents  until  removal 185 

court  majr  vacate  or  modify  contract  by  receiver     .     .     .  186 
relative  functions  of  different  receivers,  second  subor- 
dinate to  first    . 187 

receiver  entitled  to  instruction  and  advice  of  court       .     .  188 

practice  on  applying  for 188 

entitled  to  and  should  obtain  counsel    . 188 

receiver  may  collect  money  not  yet  due 189 

receiver's  functions  suspended  by  appeal  and  supersedeas  190 

sales  by  receivers 191-199 

receiver  must  conform  to  mode  fixed  by  law 191 

public  and  private  sale 191 

court  has  power  to  sell  when  necessary 192 

sale  of  steamboat 192 

receiver  can  not  purchase  for  his  own  benefit       ....  193 

can  not  purchase  at  foreclosure  or  judicial  sale    ....  194 


INDEX. 


?25 


FUNCTIONS  —  Con  tin  lied.  Section 

when  receiver  allowed  to  become  tenant  of  lands  subject  to  the 

receivership ' 195 

sale  by  receiver  to  pay  taxes 197 

discretion  allowed  receiver  in  sale  of  personalty 198 

sale  of  real  property,  implied  power  to  make  deed      ....     1U9 

confirmation  of  deed  by  court 199 

receiver's  functions  limited  to  state  where  appointed       .     .     .     239 

of  receivers,  over  corporations 313-342 

over  railways 390 

in  creditors'  suits 453-471 

over  partnerships 538-552 

over  real  property G 18-638 

G. 

GARNISHMENT, 

property  subject  to,  until  reduced  to  receiver's  possession    .     .  137 

funds  in  receiver's  possession,  not  subject  to 151 

assets  not  yet  in  possession,  subject  to 151 

of  funds  due  receiver,  a  contempt  of  court 164 

receiver  may  garnish  plaintiff  in  suit  in  which  he  was  appointed  230 

GOLD  MINES.    (See  Mines.) 

GOOD  WILL, 

of  partnership,  when  receiver  ordered  to  sell  with  lease       .     .     547 

GOVERNOR, 

of  state,  authorized  to  appoint  receiver 89 


H. 

HEIRS-AT-LAW, 

receiver  not  appointed  over  realty  in  contest  between 
bill  by,  to  determine  dower,  when  receiver  refused  . 
receiver  allowed  in  action  to  enforce  trusts  of  will 

in  possession,  when  receiver  refused 

when  granted 

contest  between  and  devisees,  when  receiver  refused 

when  granted 

when  denied  receiver  as  against  grantor      .... 
opposition  by,  to  administration,  no  ground  for  receiver 
when  allowed  receiver  as  against  tenant  for  life    . 
not  allowed  receiver  as  against  mortgagee  in  possession 
may  have  receiver  on  death  of  one  trustee  and  refusal  of  an- 
other to  act 


554 
568 
569 
569 
569 
570 
570 
571 
571 
572 
680 

694 


T2G  INDEX. 

HORSES..  Section 

when  may  be  let  by  receiver 481 

HOUSE, 

on  leased  ground,  defendant's  insolvency  not  ground  for  re- 
ceiver over 580 

HUSBAND, 

real  estate  of,  sale  by  receiver  subject  to  dower 199  a 

doing  business  in  wife's  name,  when  receiver  appointed      .     .  428 
receiver  over,  pending  divorce  suit,  does  not  divest  title  to  part- 
nership property 548 

when  denied  receiver  in  case  of  marriage  settlement      .     .     .  591 

receiver  against,  after  divorce 591 

purchaser  from,  when  allowed  receiver  as  against  settlement 

upon  wife 612 

when  devisee  allowed  receiver  as  against 700 

of  executrix,  mismanagement  ground  for  receiver     ....  708 

I. 

INCUMBRANCES, 

receiver's  sale  subject  to 199  a 

INFANTS, 

next  friend  of,  ineligible  as  receiver 75 

receivers  over  estates  of 725-732 

relief  based  on  doctrine  of  trusts 725 

granted  in  cases  of  mismanagement 725 

granted  when  executor  has  absconded 726 

refusal  of  trustees  to  act,  not  granted  on  refusal  of  one 

of  several 727 

granted  on  refusal  of  one  of  two 727 

granted  over  stock  of  goods  in  possession  of  mortgagee     .  728 

eligibility  of  receiver,  next  friend  ineligible 729 

trustee  and  executor  ineligible 729 

when  eligible 729 

receiver  liable  for  interest  on  funds  of 730 

authorized  to  relieve  poor  tenants 731 

not  discharged  on  one  of  two  infants  attaining  majority  .  732 

INJUNCTIONS, 

compared  with  remedy  by  receivers 737-748 

points  of  resemblance  between 737 

neither  remedy  changes  title 737 

both  rest  in  judicial  discretion 737 

auxiliary  nature  of 738 

ultimate  rights  not  determined 738 

principal  difference  in  effect  on  possession 739 


INDEX.  '  -  ' 


Section 
.  740 
.  740 
.     741 


m 


INJUNCTIONS  —  Continued. 

compared  with  remedy  by  receivers,  in  New  York     . 

when  injunction  bars  receiver ■ 

remedy  at  law  bars  either  injunction  or  receiver 

long  acquiescence  a  bar  to  either  remedy 742 

one  remedy  not  necessary  incident  of  other 74d 

distinct  nature  of ; 

neither  remedy  used  to  determine  title  to  public  office  .  -  44 
either  granted  to  property  in  foreign  country  ■••'?" 
both  granted  in  conflict  between  state  and  federal  courts  .  ^4b 
injunction  granted  to  protect  receiver's  possession  ...  74, 
railway  enjoined  from  condemning  land  in  receiver's  pos- 
session      

unauthorized  interference  with  realty  in  receiver's  posses- 

.  .      i  ...     747 

sion  enjoined .".'-,  747 

unauthorized  suits  against  receiver  enjoined <*< 

by  receiver  enjoined 

authorized  suit  by  receiver  not  enjoined 748 

connection  with  receivers  over  corporations       ....  749-7o4 
courts  averse  to  receivers  over  corporations  in  absence  of 

749 

statutes  

receiver  does  not  necessarily  follow  injunction 4 J 

injunction  may  follow  receiver  over  corporation  as  neces- 
sary adjunct '     *     ' 

receiver  over  corporation  equivalent  to  injunction    .     .     .     7oU 

proceedings    in    quo  warranto,   injunction    allowed   but 

receiver  refused 

suit  by  receiver  to  collect  subscriptions,  shareholder  can 

not  enjoin 

creditors  enjoined  from  separate  suits 752 

receiver  of  railway,  may  enjoin  disposal  of  land  grant  .     .     753 

railway  enjoined  from  interfering  with 753 

different   mortgagees    of    tolls,  receiver   and  injunction 

allowed 

receiver  of  railway  may  enjoin  improper  diversion  of  earn- 

.     .     .     .     754 
ings 

in  connection  with  receivers  in  creditors' suits       .     .     .     .  7BB-7BW 

creditors  before  judgment  entitled  to  neither  remedy   .     .  755 

exception  to  rule  in  partnership  cases 7o6 

injunction  and  receiver  allowed  to  protect  lien  on  vessel  .  757 
allowed    against  married  woman  doing  business  as 

j.     i                                                                    ....     757 
trader 

judgment  creditors  allowed  both  remedies "' 

when  receiver  in  creditor's  suit  denied  receiver  and  injunc- 
tion in  action  to  set  aside  assignment 759 


:23 


INDEX. 


INJUNCTIONS  —  Continued.  Section 

in  connection  with  receivers  over  partnerships      ....  760-771 

same  conditions  necessary 760 

case  must  warrant  dissolution 760 

both  refused  when  bill  fully  denied  by  answer     ....  .760 

neither  granted  in  nominal  partnership 761 

when  security  by  defendants  allowed  in  lieu  of  ...     .  761 

destruction  of  confidence,  as  ground  for 762 

irreconcilable  disagreement,  ground  for 762 

insolvency  of  partner  coupled  with  fraud,  ground  for  .     .  762 

actual  abuse  necessary 763 

insolvency  of  partner  after  dissolution,  ground  for  .     .     .  763 

violations  of  partnership  articles,  ground  for 764 

receiver  not  appointed  ex  parte  after  injunction       .     .     .  764 

when  allowed  in  case  of  farm 765 

foreign  mining  association 765 

receiver  does  not  necessarily  follow  preliminary  injunction  766 
when  injunction  dependent  on  fate  of  application  for  re- 
ceiver          766 

when  injunction  continued  with  receiver 766 

denial  by  answer  a  bar  to 767 

assignment  by  insolvent  members  after  dissolution,  ground 

for 768 

when  allowed  on  death  of  partner 769 

receiver  appointed  when  defendant  partners  enjoined  from 

collecting  debts 770 

injunction  against  continuing  business  in  same  locality  on 

sale  by  receiver 771 

in  connection  with  receivers  over  real  property     ....  772-780 
courts  averse  to  granting,  against  possession  under  claim  of 

title 772 

long  acquiescence  in  possession  as  a  bar  to 773 

refused,  as  between  lessor  and  lessee 774 

on  bill  by  heir  to  determine  dower 775 

purchaser  at  judicial  sale  allowed  injunction  and  receiver 

over  crops 776 

receiver  may  have  injunction  against  waste 777 

to  restrain  tenant  from  forbidden  use  of  premises  .     .  777 

when  allowed  in  equitable  action  for  recovery     ....  778 

against  tenant  for  life 778 

contract  between  owner  and  tenant,  relief  refused  .     .     .  778 
remainder-man  and  tenants  denied  injunction  against  re- 
ceiver dispossessing  them 779 

allowed  as  between  co-tenants 780 

dissolution  of,  compared  with  removal  of  receiver     ....  826 


INDEX. 


r20 


INNOCENT  PURCHASERS,  Section 

rights  of,  not  determined  on  order  to  surrender  possession  to 

receiver 33 

INSANE  HOSPITAL, 

when  receiver  directed  to  sell  lease  and  good  will  of       ...  547 

INSOLVENCY, 

of  defendant,  as  ground  for  receiver 11 

not  sufficient  ground  of  itself 18 

receiver  refused  on  insufficient  affidavit  of 106 

of  insurance  company 304 

when  not  sufficient  for  receiver  over  real  estate  ....  559 

when  sufficient 566 

of  partnership,  as  ground  for  receiver 484 

of  individual  partner 496,  511 

of  tenant  in  common,  as  ground  for  receiver 604 

of  mortgagor,  as  ground  for  receiver 666 

must  be  clearly  shown 667 

in  case  of  leasehold  mortgage 676 

of  canal  company,  ground  for  receiver  in  aid  of  bondholders  .  678 

of  executor,  as  ground  for  receiver 710 

INSOLVENT  CORPORATION.    (See  Bank,  Corporation,  Insur- 
ance Company.) 
INSURANCE, 

on  exempted  property,  receiver  of  debtor  not  entitled  to     .     .  443 

on  mortgaged  premises,  neglect  of,  ground  for  receiver  .     .     .  672 

INSURANCE  COMPANY, 

receiver  of,  when  can  not  sue  on  premium  note 204 

pleadings  in  actions  by  receivers  of,  on  premium  notes  .     .     .  236 

what  may  be  set  off  in  such  actions 247 

receiver  of,  can  not  dispense  with  conditions  of  policy  as  to  loss  264 

mismanagement  of  funds  of,  ground  for  receiver       ....  304 

receiver  may  sue  on  note  given  for  policy 316 

suit  by  receiver  of,  on  premium  note,  defense  to 318 

note  surrendered  and  canceled  by,  receiver  can  not  sue  .     .     .  81  9 

dividends  improperly  paid  by,  receiver  may  recover  back    .     .  321 

creditors  enjoined  from  suing  for 321 

assessments  on  premium  notes,  receiver  may  sue  for  ....  326 

what  receiver  must  allege  and  prove 827 

receiver  must  make  assessment  and  apportionment  .     .     .  328 

receiver  takes  place  of  directors 329 

sanction  and  approval  of  court 329 

receiver  acts  ministerially,  not  judicially 330 

may  make  new  assessment,  or  re-assessment 330 

approval  by  court  not  a  judicial  act 330 


730  INDEX. 

INSURANCE  COMPANY—  Continued.  Section 

assessments  on  premium  notes,  form  of,  when  general  on  all 

notes 331 

proof  as  to  losses,  what  required 331 

receiver  may  sue  for,  to  pay  equitable  claims  for  losses     .  332 

defense  by  maker,  what  denied 332 

receiver  of,  power  in  adjusting  losses 334 

can  not  waive  express  stipulations  of  policy 334 

allegations  of  insolvency  as  ground  for 346 

INSURANCE  POLICY, 

receiver  can  not  waive  express  stipulations  of 334 

INTEREST, 

of  plaintiff,  requisites  of,  to  warrant  receiver 12 

of  defendant,  must  be  subject  to  execution  to  warrant  a  receiver  31 

on  funds  due  from  receiver,  surety  liable  for 131 

liability  for,  when  discretionary  with  court 131 

non-payment  of,  as  ground  for  receiver  over  railway      .     .     .  376 

against  receiver  of  railway,  when  disallowed 394  i 

over  mortgaged  premises 649 

effect  of  payment  of,  by  receiver  to  mortgagee 649 

on  funds  of  infant,  when  receiver  liable  for 730 

liability  of  receiver  for,  on  mingling  funds 803 

on  loaning  funds 804 

INTERLOCUTORY  ORDER, 

not  appealable 26 

appeals  from,  in  Michigan 27 

INTERPLEADER, 

bill  of,  receiver  may  bring  against  different  claimants  .  .  .  263 
IRISH  CHANCERY, 

receiver  favorite  remedy  in 40 

IRREPARABLE  LOSS, 

must  be  shown  as  ground  for  receiver 3 

J. 

JEWELRY, 

receiver  appointed  over,  on  creditor's  bill 432 

JUDGE.    (See  Court.) 

JUDGMENT,    (See  Creditors,  Judgment  Creditors.) 

in  suit  by  receivers  in  one  state,  a  bar  to  subsequent  action  in 

another  state 206 

in  action  by  receiver,  bar  to  subsequent  suit  for  same  cause  of 

action .  219 


INDEX.  I  d  i 

JUDGMENT  —  Continued.  Suction 

against  receiver,  only  enforceable  out  of  funds  in  his  hands  as 

receiver 25o 

sale  of,  by  receiver,  with  covenant,  no  personal  liability     .     .  272 

against  receiver  for  collection  of  taxes,  how  entered       .     .     .  340 

against  receiver  of  railway  for  injuries 395 

creditors  not  entitled  to  receiver  or  injunction  before     .     .     .  406 

exception  in  partnership  cases 407 

in  case  of  lien  on  vessel 408 

in  action  to  charge  property  of  married  woman  with 

her  debts 409 

no  lien  on  debtor's  property  after  assignment  to  receiver     .     .  423 

realty  subject  to  lien  of,  on  termination  of  receiver's  functions  602 

JUDGMENT  CREDITORS, 

receivers  hi  aid  of 399-47 1 

principles  on  which  the  relief  is  granted 399-439 

inadequacy  of  legal  remedy  the  leading  principle  .      .  399 

American  law  shaped  by  New  York  courts    ....  400 

former  New  York  chancery  system 400 

defendant's  want  of  property  no  objection     ....  400 

duty  of  judgment  creditor  to  apply  for 400 

no  objection  that  defendant  had  not  answered  .     .     .  400 
appointed  on  proceedings  supplementary  to  execution 

under  New  York  code 401 

almost  a  matter  of  course 401 

object  of 401 

remedy  a  cumulative  one 401 

creditor  must  use  diligence 402 

delay  ground  for  refusing 402 

acquiescence  in  debtor's  possession,  when  ground  for 

refusing 402 

remedy  at  law  must  be  exhausted 403 

not  granted  when  plaintiff  can  levy  execution  on  debt- 
or's property 403 

not  granted  when  debtor  would  have  paid  judgment 

if  notified 403 

not  granted  to  collect  municipal  tax 403  a 

not  granted  on  execution  returned  nulla  bona  before 

return  day 404 

when  appointed  over  joint  property  of  two  defendants 

on  judgment  against  one 405 

refused  when  not  alleged  that  execution  was  directed 

to  sheriff's  county 405 

creditor  before  judgment  not  entitled  to  injunction  or 

receiver 40G 


732  INDEX. 

JUDGMENT  CREDITORS  —  Continued.                                             Section 
creditor  before  judgment,  when  entitled  to,  exception  in  part- 
nership cases 407 

in  case  of  lien  on  vessel 403 

in  action  to  charge  property  of  married  woman 

with  her  debts 409 

fraudulent  assignments  by  debtor,  ground  for    .     .     .411 
appointment  of,  does  not  determine  rights  of  assignee 

under  assignment  from  debtor 411 

allowed  on  refusal  of  assignee  to  act 413 

on  mismanagement  by  assignee 412 

no  objection  to,  that  property  is  claimed  by  adverse 

claimants 413 

denial  of  property  no  objection  to  reference  to  appoint  414 
appointed,  though  debtor  has  only  an  equity  of  re- 
demption               .     .  414 

not  appointed  to  attack  fraudulent  assignment  which 

may  be  done  by  creditor 414 

reference  to  master  to  appoint 415 

practice  under 415 

examination  under 415 

courts  averse  to  granting,  as  against  third  parties  claiming  real 

estate 410 

granted  over  rents  of  debtor's  building 417 

when  granted  over  real  estate 418 

not  appointed  as  against  mortgagee  in  possession       .     .     .     .419 
when  appointed  as  against  mortgagee  of  chattels        ....  420 
creditors  may  maintain  action  to  set  aside  fraudulent  mort- 
gage by  debtor 421 

real  estate  in  possession  of,  in  custody  of  court  ....  422 

when  title  to  realty  vests  in 423 

purchaser  at  sale  by,  when  takes  title  as  against  purchaser 

at  sheriff's  sale 423 

when  subordinate  to  purchaser  at  sheriff's  sale       .     .  424 

takes  real  property  subject  to  judgment  liens       ....  424 

when  discharge  in  bankruptcy  no  bar  to  appointing      .     .  425 
not  granted  when  it  would  interfere  with  administration 

of  debtor's  estate 427 

granted  where  husband  conducting  business  in  name  of 

wife 428 

not  directed  to  make  payments  until  claims  allowed  .  428 

discretion  of  court  in  ordering  sale  by 429 

when  not  appointed  over  all  of  debtor's  estate     ....  429 
may  be  extended  over  remainder  in  behalf  of  other  cred- 
itor       429 


INDEX.  » do 

JUDGMENT  CREDITORS  —  Con  tinned.                                            Section- 
payment  by,  priority  as  between  judgment  creditor  and  mort- 
gagee         430 

when  allowed  after  bill  dismissed  on  demurrer    ....  431 

nature  of  property  over  which  appointed 432 

may  be  appointed  to  take  charge  of  rings  and  jewelry       .  432 

of  interest  in  firm 432 

to  collect  rents  of  benefice 432 

not  appointed  when  answer  alleges  nothing  due  ....  433 

application  for,  delayed  to  examine  regularity  of  judgment  433 

waiver  of  answer  under  oath  no  bar  to 434 

when  defendant  required  to  pay  fund  into  court       .     .     .  435 

courts  averse  to  appointing  ex  parte 43G 

continued  to  protect  prior  creditors  notwithstanding  plaint- 
iff dismisses  bill 437 

appointed  in  proceeding  to  enforce  decree  for  alimony       .  438 
action  by  to  set  aside  conveyance  made  to  defeat  ali- 


mony 


438 


allowed  where  only  security  for  judgment  a  life  estate     .  439 

of  the  receiver's  title 440-452 

appointment  does  not  divest  prior  liens 440 

receiver  acquires  no  title  to  exempted  property  ....  441 

nor  to  insurance  on  exempted  property 442 

assignment  to  receiver 443 

what  passes  to  receiver  under 444 

should  except  exempted  property 444 

right  of  action  for  tort  does  not  pass  under 444 

irregularities  in  appointment  no  justification  for  refusal  to 

assign 445 

debtors  compelled  to  execute,  though  swearing  to  no  prop- 
erty      440 

partakes  of  nature  of  mortgage 446 

re-assignment  not  necessary 446 

no  assignment  necessary  under  New  York  code  ....  447 
receiver  only  takes  right  of  action  as  to  property  fraudulently 

assigned 447 

priority  over  judgment  creditor  subsequently  levying    .     .     .  448 

title  not  defeated  by  delay  in  taking  possession 448 

title  to  choses  in  action  as  between  receiver  and  purchaser       .  449 

when  not  entitled  to  trust  fund 450 

takes  title  to  estate  by  curtesy 451 

acquires  no  title  when  debtor  dies  before  appointment  .     .     .  452 
of  the  receiver's  functions  and  rights  of  action     ....  453-471 

functions  usually  fixed  by  order  of  appointment 453 

rights  of  action  under  New  York  chancery  system    ....  453 

under  code  cf  procedure 454 


16-i  INDEX. 

JUDGMENT  CREDITORS  —  Continued.  Section 

receivers  may  sue  to  set  aside  fraudulent  assignments     .     .     .  454 

should  join  all  fraudulent  grantees 454 

may  remove  cloud  from  title 454 

may  not  enforce  trust 454 

limit  to  receiver's  right  of  action 455 

can  only  sue  to  extent  necessary  to  satisfy  judgments  .      .  455 

can  not  join  rights  of  subsequent  creditors 455 

estoppel  of  creditor  estops  receiver 456 

can  not  take  forcible  possession  of  property  assigned     .     .  457 
title  claimed  by  third  parties  not  determined  on  summary 

application 457 

when  assignees  permitted  to  retain  possession  pending  action  458 

when  not  entitled  to  injunction  and  receiver 458 

suit  by,  to  set  aside  assignment  for  benefit  of  creditors    458-460 

what  receiver  must  allege 459 

effect  of  order  of  appointment        459 

when  receiver  can  not  maintain  suit  against  purchaser  460 

priority  as  between  different  judgment  creditors        ....  461 

receivers  in  aid  of  proceedings  in  bankruptcy 462 

can  not  allow  preference 462 

rights  of  action,  can  not  enforce  subscription  to  capital  stock  463 

defendant  can  not  set  off  judgment  against  receiver     .     .  464 

receiver  entitled  to  letters  patent 464  a 

effect  of  sale  of  letters  patent  by  receiver 464  a 

entitled  to  membership  in  exchange 464  a 

may  sue  for  proceeds  of  note  in  hands  of  third  parties     .  465 
can  not  by  motion  reach  interest  of  debtor  as  devisee 

under  will 466 

may  sue  debtor  for  conversion  of  property 467 

when  can  maintain  no  action  concerning  mortgaged  chattels  467 
can  not  recover  of  debtor  money  received  subsequent  to 

appointment 467 

may  recover  usury  paid  by  debtor 468 

when  can  not  recover  for  property  sold  at  sheriff's  sale      .  469 
defendant  can  not  object  to  irregularities  in  receiver's  ap- 
pointment     .              470 

when  directed  to  pay  rents  to  landlord 470 

no  extraterritorial  rights  of  action        471 

effect  of  death  of  parties  or  of  receiver 471  a 

not  prejudiced  by  receiver  over  debtor's  realty  in  aid  of  in- 
cumbrancer          567 

receiver  for,  may  be  extended  to  protect  mortgagee  ....  '562 
receiver  not  granted  for,  as  against  mortgagee  in  possession  680.  6*7 

when  allowed  receiver  against  executor 715 

when  denied  receiver  against  administrator 716 


INDEX.  » OO 

JURISDICTION,  Section 

equitable  nature  of 40 

of  courts  appointing  receivers  in  this  country        ......       41 

original  nature  of 41 

as  to  foreign  property 44 

of  court  first  acting,  exclusive  nature  of 48,  50 

relative,  of  state  and  federal  courts 50-62 

of  United  States  courts  in  bankruptcy,  when  subordinate  to 

state  courts 51, 52 

when  asserted,  to  exclusion  of  state  courts,  over  insolvent 

corporation 53 

of  United  States  courts,  in  foreclosing  trust  deed  against  rail- 
road, when  exclusive 54 

of  state  and  federal  courts,  conflict  between,  a  ground  for  re- 
ceiver        58 

of  receiver,  as  to  extraterritorial  rights  of  action      .     .     .  239-244 
of  court,  receiver  not  ordered  to  sell  pending  appeal  concern- 
ing        543 

JURY, 

trial  by,  when  discretionary 254  b 

not  allowed  on  receiver's  accounts 797 


L. 

LACHES, 

bars  right  to  receiver 14 

of  judgment  creditor,  when  a  bar  to  relief 402 

LAND.    (See  Real  Property.) 

LAND  GRANT, 

to  railway,  injunction  against  disposal  of 373 

receiver  granted  to  prevent  lapsing  of 386 

LANDLORD, 

can  not  distrain  for  rent  when  goods  have  passed  into  receiver's 

possession 156 

guilty  of  contempt  in  so  distraining 163 

when  receiver  directed  to  pay  sub-rents  to 470 

when  denied  receiver  as  against  lessee 562 

LAND  SURVEYOR, 

eligible  as  receiver, 69 

LEASE, 

when  receiver  of  partnership  ordered  to  sell  with  good  will     .  547 

action  to  forfeit,  when  receiver  refused 562 

assignee  of,  denied  receiver 579 


73  G  INDEX. 

LEASEHOLDS,  Section- 

receivers  over,  when  allowed 578 

landlord  maj-  re-enter  without  leave  of  court        581 

mortgage  of,  receiver  allowed  in  foreclosure 665 

when  allowed  before  answer        665 

allowed  when  mortgagor  insolvent 676 

LEGATEE, 

of  partner,  when  entitled  to  receiver 535 

under  will,  when  denied  receiver £69 

LEGISLATURE, 

may  authorize  governor  to  appoint  receiver 39 

LESSEE, 

of  real  property,  receiver  refused  in  behalf  of  lessor      .     .     .532 
LETTERS  PATENT.     (See  Patent  Right.) 

LEVY, 

of  execution,  on  property  held  by  receiver,  a  contempt  of  court  163 

by  sheriff,  when  receiver's  title  subject  to 440 

on  partnership  property,  when  not  affected  by  receivership      .  495 

LIABILITIES, 

of  receiver 269-286 

liable  directly  to  court  appointing  him 269 

liability  to  third  persons  enforced  by  court 269 

improper  payments        269 

can  not  be  called  to  account  by  another  court      ....  269 
receiver  and  not  plaintiff  liable  for  injury  to  property  in  his 

possession 270 

liability  can  not  be  enforced  without  leave  of  court  ....  271 

not  individually  liable  on  covenant  made  in  official  capacity    .  272 

not  liable  on  covenant  of  person  over  whom  appointed  .     .     .  273 

when  liable  for  rent 273 

loss  of  funds  by  failure  of  bank 274 

of  receiver  of  bank  to  pay  in  full 274  a 

to  pay  check  or  draft 274  a 

not  liable  for  loss  without  his  fault 275 

bills  of  exchange  of  failing  tradesman 275 

liable  for  use  of  property  in  private  business 276 

not  liable  for  speculative  profits 276 

liable  as  trespasser  for  forcibly  taking  mortgaged  property       .  277 

to  court,  does  not  terminate  until  discharge 278 

appointing  receiver  trustee  in  insolvent  proceedings  does  not 

relieve  him  from  liability  as  receiver 278 

i  eceivers  of  railway  liable  to  action  in  another  state  for  breach 

of  duty  as  common  carriers 279 

liability  to  commitment  for  failing  to  pay  money  into  court     .  280 


INDEX.  <  O « 

LIABILITIES  —  Continued.  Section 

of  receivers,  not  liable  for  rent  of  premises  to  firm   ....  2*1 

liable  for  payment  to  wrong  persons 282 

when  not  liable  for  loss  through  real  estate  remaining  in 

owner's  possession 283 

for  loss  of  rents  by  solicitor  assuming  to  act  as  receiver     .  284 

liability  extended  to  administrator  of  receiver     ....  285 

not  released  by  dismissal  of  bill 286 

of  receiver  over  railway,  for  injuries 305 

action  against,  for  injuries 395 

judgment  against,  only  in  official  capacity           ;  395 

as  common  carrier,  in  another  state 398 

when  liable  for  interest  on  infant's  funds 730 

LICENSE, 

of  market  stall,  receiver  refused 32 

LIEN,    (See  Mechanic's  Lien.) 

not  created  by  appointment  of  receiver 5 

of  plaintiff,  as  ground  for  receiver 11 

of  creditors,  not  disturbed  by  foreign  receiver 47 

not  divested  by  appointment  of  receiver 138 

possession  of  receiver  subject  to 138 

of  judgment  creditor,  protected  against  receiver 138 

of  attorneys  for  services,  receiver  takes  fund  subject  to      .     .  138 
of  judgment  creditor  on  real  estate  of  corporation,  not  divested 

by  receiver  in  limine 302,  348,  349 

of  vendor  for  land  sold  railway,  receiver  in  aid  of     ...     .  £07 

on  freight  and  earnings  of  vessel,  receiver  to  protect       .     .     .  408 

receiver  of  debtor  takes  realty  subject  to 424 

not  divested  by  appointment  of  receiver  on  creditor's  bill    .     .  440 
of  judgment  creditors  of  partnerships,  how  affected  by  receiv- 
ership    495 

of  judgment,  realty  subject  to,  on  termination  of  receiver's 

functions 002 

LIMITATIONS.    (See  Statute  of  Limitations.) 

LIMITED  PARTNERSHIP, 

when  creditors  of  entitled  to  receiver 407,  508 

LIS  PENDENS, 

receiver  refused  when  notice  of  sufficient  to  prevent  transfer 

of  real  property 561 

LOSS.    (See  Irreparable  Loss.) 

LUMBER, 

partnership  in,  when  receiver  allowed 500 

47 


738  INDEX. 

LUNATICS,  Section 

receivers  over  estates  of 733-736 

when  allowed 733 

required  to  surrender  to  administrator 733 

relief  discretionary        734 

refused  where  rival  claimants 734 

solicitor  under  commission  ineligible  as 735 

when  required  to  account 736 

reference  to  master  to  ascertain  condition  of  estate       .     .     736 


M. 

MANAGEMENT, 

of  business  by  receiver,  principles  regulating 36 

of  partnership  business,  not  province  of  court 480 

to  what  extent  may  be  continued  by  receiver  pending  liti- 
gation       481 

MANDAMUS, 

when  a  bar  to  receiver 32 

refused  against  receiver  of  railway 374 

MARKET, 

stall  in,  receiver  refused 32 

MAERIAGE  SETTLEMENTS, 

when  receiver  denied  in  case  of     ...  - 591 

after  marriage,  when  receiver  allowed  against 612 

MARRIED  WOMAN, 

receiver  granted  in  suit  to  charge  property  of  with  her  debts  .  409 

MARSHAL, 

will  not  be  directed  to  take  prop3rty  out  of  receiver's  hands  .  52 

MASTER  IN  CHANCERY, 

reference  to,  to  appoint  receiver 63 

selection  of  receiver  by,  courts  averse  to  interfering  with    .     .  64 

grounds  of  interference 64 

when  required  to  revise  report 64 

ineligible  as  receiver 70 

and  clerk  of  court,  ordered  to  act  as  receiver 71 

reference  to,  to  appoint,  practice  on 90 

when  appointment  complete 90 

objections  to  appointment 90 

reference  to,  as  to  repairs  by  receiver 180 

on  creditors'  bills,  to  appoint  receiver 415 

practice  under 415 

examination  under 415 

receiver  required  to  produce  books  of  account  before     .     .     .  544 


INDEX.  i  6'J 

MASTER  IN  CHANCERY  —  Continued.  Section 

reference  to,  in  case  of  receiver  over  lunatic 736 

exceptions  to  report  of,  on  receiver's  compensation    .     .     .     .     7*  I 

report  of,  on  receiver's  accounts 800,  801 

how  reviewed 801 

courts  investigate  principles  of,  but  not  items      .     .        800,  801 

distinction  as  to 801 

exceptions  to 801 

MATERIALS, 

furnished  railway,  creditors  not  entitled  to  priority    ....     379 

MECHANIC'S  LIEN, 

against  property  in  receiver's  possession 171 

when  not  divested  by  sale  of  railway 398  g 

receiver  denied  in  action  to  enforce 586 

MEMBER  OF  PARLIAMENT,    ' 

eligibility  as  receiver  considered 70 

MERITS, 

of  cause,  not  decided  on  application  for  receiver        ....        6 

MILLS, 

wharfage  in  front  of,  receiver  of  mills  entitled  to      ....     158 
receiver  as  between  tenants  in  common  of 604 

MINES, 

receiver  on  difficulty  of  managing  by  co-tenants        ....  606 

controversy  between  owners 606 

purchaser  of  gold  mine  at  mortgage  sale,  when  granted  receiver  614 
purchaser  of  colliery  allowed  receiver  on  bill  to  set  aside  pur- 
chase for  fraud        615 

receiver  of,  when  discharged 615 

MORTGAGES, 

receiver  over  mortgaged  premises,  not  dispossessed  by  assignee 

in  bankruptcy 52 

prior  jurisdiction  of  United  States  courts  respected  by  state 

court 54 

receiver  of  rents  appointed  after  decree  in  foreclosure    .     .     .  110 
when  receiver  refused  after  decree  for  redemption     .     .     .     .110 

assignment  of,  as  security  for  receivership,  held  good    .     .     .  125 

directions  as  to  payment,  receiver  not  allowed  to  apply  for       .  181 
receiver  holding  equity  of  redemption  can  take  no  benefit  by 

purchasing  at  foreclosure  sale 194 

to  receivers  of  bank,  may  be  foreclosed  by  successor       .     .     .  215 

may  be  foreclosed  by  receivers  of  another  state 243 

appointment  of  receiver  over  one  defendant  in  foreclosure  suit, 

no  bar  to  continuing  suit 259 


740  INDEX. 

MORTGAGES  —  Continued.  Sectios 

foreclosure  of  mortgage  given  by  corporation,-  when  receivers 

need  not  be  made  defendants 260 

not  due,  receiver  may  collect  and  discharge 189 

receiver  liable  as  trespasser  for  forcibly  taking  mortgaged  prop- 
erty       277 

of  rafiways,  receivers  in  aid  of 376-389 

inadequacy  of  security  and  insolvency  as  ground  for  .     .  376 

appointment  not  a  matter  of  course 377 

not  granted  where  it  would  cause  irreparable  injury     .     .  377 

proceedings  for,  regarded  as  in  rem 378 

right  of.  limited  to  property  mortgaged 378 

creditors  for  materials  and  supplies  not  entitled  to  priority  379 

receiver  over  tolls 380 

principles  governing 381 

right  to,  as  between  different  mortgagees  of  tolls     382,  385 
mortgagees  pari  passu,  not  allowed  preference       .  383,  385 

granted  in  behalf  of  state  holding  mortgage       ....  384 

validity  of  bonds  not  determined  on  application  for      .     .  387 

relative  jurisdiction  of  state  and  federal  courts  ....  388 

right  to  discharge,  on  payment  of  mortgage        ....  389 

may  pay  what  debts 391 

to  delay  creditors,  no  ground  for  receiver  before  judgment      .  406 
fraudulent,  by  debtor,  creditors  may  set  aside  notwithstanding 

receiver 421 

of  chattels,  when  receiver  has  no  right  of  action       ....  467 

receivers  in  aid  of  foreclosure  of 639-691 

principles  governing  the  relief 639-665 

the  jurisdiction  cautiously  exercised 639 

only  granted  in  strong  case 639 

legal  mortgagee  witb  right  of  entry  not  entitled  to      .  640 

may  have,  when  can  not  take  possession      .     .     .  641 

refusal  of  trustee  to  take  possession 641 

when  receiver  refused 641  a 

rents  and  profits,  mortgagee  not  entitled  to  receiver  of, 

when  security  adequate .  642 

test  as  to  adequacy  of  security        642 

not  entitled  to,  when  mortgage  not  due 642 

entitled  to,  when  security  inadequate  and  mortgagor 

insolvent 643 

mortgagee  entitled  to  rents  in  receiver's  hands  to  make 

up  deficiency        643 

past-due  rents 643 

when  entitled  to  unpaid  x-ents 644 

liability  for  waste  of,  by  receiver 645 


INDEX. 


r-ii 


MORTGAGES  —  Contin  ucd.  Section 

receiver's  crops  on  mortgaged  premises,  receiver  over     ...     646 

receiver  not  entitled  to  severed  crops 646 

when  refused  as  to  crops 646 

crops  grown  by  receiver 646 

when  appointed  as  to  mortgage  of  chattels 647 

may  be  appointed  though  mortgaged  property  in  foreign 

country "48 

allowed  when  interest  in  default 649 

effect  of  payment  of  interest  by  receiver  to  mortgagee       .     649 

receiver  represents  all  parties  in  interest 650 

assignees  in  bankruptcy  of  mortgagor 650 

mortgagee  appointed,  duties  of 651 

order  to  lease  premises •     .651 

mortgagee  authorized  to  appoint  by  mortgage     ....     652 

receiver  mortgagor's  agent  in  such  cases 652 

effect  of  mortgagor  attorning  to  receiver       ....     652 

English  statute  authorizing 652 

not  appointed  over  property  of  soldiers  when  prohibited  by 

statute 653 

appointed  in  behalf  of  mortgagor  to  keep  down  interest  .  654 
mortgagee  in  possession  not  divested  by  receiver  .  .  .  654 
may  be  appointed  after  decree  in  case  of  emergency     .     .     655 

when  refused  after  decree 655 

mortgagee  not  party,  can  not  divest  receiver's  possession  by 

notice  to  tenants 656 

mortgagor  not  entitled  to  rents  paid  into  court 656 

mortgagor  entitled  to  pay  debt  and  have  receiver  discharged  .     657 

equitable  mortgages,  relief  granted 658 

deposit  of  title  deeds  as  security 658 

holders  of  municipal  bonds  secured  by  rates  and  assessments, 

not  entitled  to 658 

equitable  mortgagee  of  private  corporation  allowed  receiver    .     659 

official  liquidator  appointed 659 

petition  for,  should  show  who  is  in  possession 660 

reasons  for 660 

on  decree  pro  confesso  amount  due  should  be  shown      .     .     .     660 
railway  mortgages,  receivers  granted  on  same  principles     .     .     661 
inadequacy  of  security  and  insolvency,  ground  for  .      .      .     661 
receiver  in  behalf  of  judgment  creditor  extended  in  behalf  of 

mortgagee  "6'v 

need  not  be  appointed  over  entire  estate 663 

defense  of  usury  sworn  on  information 664 

mortgage  of  leasehold,  receiver  allowed 665 

when  allowed  before  answer 665 

allowed  against  administrator  of  mortgagor 665  a 


74:2  INDEX. 

MORTGAGES  —  Contin  lied.  Section 

inadequacy  of  security  and  insolvency  of  mortgagor      .     .  666-678 

inadequacy  principal  ground  for 666 

elements  of  inadequacy 666 

general    rule    that  inadequacy  and   insolvency  must  be 

shown 666 

satisfactory  proof  required 667 

inadequacy  confined  to  particular  mortgage  in  question     .  667 

doctrine  of  the  Irish  Chancery 668 

in  New  Jersey,  the  general  rule  not  recognized    ....  669 

fraud  and  bad  faith  ground  for 670 

change  or  depreciation  in  property 670 

transfer  to  insolvent  person  ground  for 670 

assignment  to  creditors,  when  not  ground  for    .     .     .  670 

the  doctrine  in  Mississippi 671 

non-payment  of  taxes  ground  for 672 

of  insurance,  ground  for 672 

contest  whether  property  covered  by  mortgage  ground  for  672 

doctrine  in  Nevada,  general  rule  recognized 673 

mortgagees  purchasing  at  foreclosure  sale  allowed  re- 
ceiver      673 

doctrine  in  California,  mortgagee  not  allowed  receiver  for 

inadequacy  and  insolvency 674 

doctrine  in  Iowa 674 

when  allowed  though  only  portion  of  debt  due   ....  675 
not  allowed  if  doubtful  as  to  amount  due  and  inadequacy 

denied  by  answer 675 

insolvency  ground  for  receiver  in  case  of  mortgage  over 

leasehold 676 

no  objection  that  premises  are  in  possession  of  tenant   .     .  677 
bondholders  of  canal  company  allowed  receiver  on  in- 
solvency         678 

when  allowed  in  behalf  of  wife 678  a 

exemption  of  rents 678  b 

receivers  as  between  different  mortgagees 679-691 

prior  mortgagee  in  possession,  not  granted  as  against    .     .  679 

not  granted  on  creditor's  bill  as  against 680 

on  bill  by  heirs-at-law 680 

granted  when  nothing  appears  due  mortgagee     ....  681 
prior  mortgagee  not  in  possession,  receiver  allowed  in  aid 

of  subsequent  mortgagee G82 

consent  of,  not  necessary 682 

can  only  prevent  by  asserting  right  and  taking  posses- 
sion    682 

granted  annuitants  as  against 683 

need  not  be  made  parties 683 


INDEX. 


r43 


MORTGAGES  —  Con  tin  ued.  Section 

receiver  granted  though  mortgagor  out  of  jurisdiction  ...     684 

appointment  without  prejudice  to  prior  interests    .     .     685 

for  whose  benefit  made 685 

no  objection  that  other  mortgagees  are  satisfied       ...     686 
that  plaintiff  represents  only  one-ninth  of  debt       .     .     686 
not  appointed   for  judgment  creditor  as  against  puisne 

mortgagee  in  possession 6b7 

rents,  when  junior  mortgagee  entitled  to 688 

when  prior  mortgagee  entitled  to 688 

effect  of  extending  receiver 688 

subrogation 688 

different  doctrine  in  Virginia 689 

assigned  to  junior  mortgagee,  prior  mortgagee  can  not 

have  receiver  of 690 

receiver  of,  allowed  on  foreclosure  by   junior  mort- 
gagee      691 

tenants  required  to  attorn  to  receiver 691 

MORTGAGEE,    (See  Mortgages.) 

when  eligible  as  receiver ^6 

of  West  India  estates,  eligible 81 

appointed  without  security H8 

in  possession,  receiver  refused  as  against,  on  creditor's  bill  .  .  419 
of  chattels,  receiver  appointed  in  behalf  of  creditors  against  .  420 
priority  of  payment  as  against  judgment  creditor  ....  430 
entitled  to  rents  in  receiver's  hands  to  make  up  deficiency  .     .     643 

right  of,  to  unpaid  rents 644 

duty  of,  when  appointed  receiver 651 

in  possession,  not  divested  by  receiver 654 

may  have  receiver  for  judgment  creditor  extended  to  his  mort- 
gage      662 

receivers  as  between  different  mortgages 679-691 

prior,  in  possession,  receiver  not  granted  against      .      .     .     679 
not  in  possession,  receiver  allowed  in  aid  of  subsequent 

mortgagee 682 

of  goods  of  infant,  receiver  against 728 

when  entitled  to  apply  for  receiver's  discharge 839 

MORTGAGOR,    (See  Mortgagee,  Mortgages.) 

when  receiver  appointed  in  behalf  of  one  of  several       .     .     .     654 
entitled  to  pay  debt  and  have  receiver  discharged      ....     657 

MOTION, 

irregular  to  appoint  receiver  without 84 

affidavits  in  support  of 84 

rehearing  of,  when  allowed 91,  92 

when  not  allowed  in  creditor's  suit 92 


744  INDEX. 

MOTION  —  Continued.  Section 

demurrer  to  bill,  when  no  objection  on  hearing  of     ...     .  93 

may  be  entertained,  although  plea  to  amended  bill  undisposed  of  95 

to  substitute,  regularity  of  proceedings  can  not  be  questioned  97 

for  receiver  before  answer,  heard  on  affidavits 107 

defendant's  affidavit  admissible  against 107 

to  take  action  by  receiver,  not  usually  allowed  under  English 

and  Irish  practice 181 

MUNICIPAL  CORPORATION, 

enjoined  from  interfering  with  receiver's  possession  of  wharf- 
age         158 

creditor  of,  not  entitled  to  receiver  to  collect  tax 403  a 


N. 

NATIONAL  BANKS, 

action  by  receiver  of,  allegations  required  as  to  his  appoint- 
ment      237 

receivers  over 358-364 

appointed  by  comptroller 358 

effect  of 358 

title  of 359 

can  not  avoid  pledge  of  notes 359 

assets  exempt  from  taxation 359 

regarded  as  agent  of  comptroller 360 

no  control  over  bonds  deposited  with  United  States  treas- 
urer      360 

rights  as  to  bringing  suits 360 

power  to  contract  or  sell 360 

may  enforce  individual  liability  of  shareholders  ....  360  a 

suits  by,  what  must  be  averred 361 

what  must  be  proven 361 

appointment  of,  by  comptroller,  not  exclusive  of  jurisdic- 
tion of  equity 362 

judgment  creditor  may  have 362 

state  courts  have  no  jurisdiction  over 363 

property  in  hands  of,  can  not  be  sold  by  creditor      .     .     .  364 

NEWSPAPER, 

publication  of,  by  receiver 481 

NEW  YORK, 

code  of  procedure,  receiver  under 23 

compared  with  injunction 49 

receivers  on  creditors'  bills,  under  former  chancery  system     .  400 

under  code  of  procedure 401 


INDEX. 


745 


NORTH  CAROLINA,  Section 

code  of  procedure,  effect  of ~" 

NOTES.    (See  Commercial  Paper.) 

NOTICE, 

of  application  for  receiver 111-117 

courts  averse  to  interference  without 1 1 1 

want  of,  judicial  error H* 

ground  for  reversal ■"* 

how  taken  advantage  of "* 

presumed  on  appeal *  " 

interference  without,  grounds  of H° 

facts  must  clearly  appear H« 

service  of  process  considered  with H4 

notice  served  immediately  on  filing  bill,  under  English 

practice ^^ 

necessary  to  appointment  over  insolvent  corporation       .     .     .  115 

New  York  chancery  practice  as  to 11*5 

service  of H^ 

when  sufficient  on  co-defendant 11(5 

unnecessary,  when  parties  appear  by  counsel  to  oppose  motion  116 

■when  defendant  has  absconded H? 

when  he  has  left  state  and  it  is  necessary  to  collect  rents  .  117 

when  a  trustee  defendant  is  beyond  jurisdiction      .     .     .  117 

non-resident  defendants *  1 ' 

of  appointment,  formal  notice  not  necessary  to  fix  liability  for 

contempt 1"" 

of  application  for  leave  to  sue  receiver,  to  whom  given  ...  265 

of  motion  to  remove  receiver y24 


o. 

OATH, 

to  receivers  under  statute,  omission  of  does  not  vitiate  proceed- 
ings       " 

OBJECT, 

of  receivership "1 

OFFICE, 

controversies  concerning,  not  determined  in  equity    ....  21 

contest  over,  receiver  refused 21 

fees  of,  receiver  refused ** 

when  granted 

salary  of,  receiver  refused ** 

OFFICER  OF  COURT, 

receiver  considered  as  an 


746 


INDEX. 


OFFICERS,  Section 

of  corporation,  when  competent  as  receivers 354 

of  state,  enjoined  f  roni  disposing  of  railroad  land  grant  .     .     .     373 
equity  averse  to  receiver  when  trust  vested  in     ...     .     696 

OFFSET.    (See  Set-off.) 

P. 


PARLIAMENT.    (See  Member  of  Parliament.) 
PARTITION, 

receiver  allowed  in  action  for 607 

PARTNERSHIPS, 

interlocutory  appointment  of  receiver  over,  not  appealable      .  26 

when  appealable 27 

non-resident,  receiver  refused  against 44 

when  bill  for  dissolution  and  receiver  an  act  of  bankruptcy     .  56 
assignee  in  bankruptcy  of,  when  allowed  receiver  as  against 

assignment .     .  57 

administrator  of  deceased,  eligible  as  receiver 78 

receiver  may  be  appointed  as  part  of  final  decree       ....  109 
real  estate  of,  when  sold  subject  to  judgment  against  partner  199  a 

receiver  of,  can  not  be  garnished  as  to  assets  in  his  hands  .     .  151 

can  not  maintain  action  of  trover  in  his  own  name  .     .     .  209 

allowed  to  sue  in  his  own  name  for  money  due  the  firm     .  210 
rent  due  from,  can  not  be  set  off  in  action  by  receiver  of  the 

firm 253 

when  receiver  not  liable  for  rent    .    ■ 281 

creditors  of,  when  allowed  receiver  and  injunction  before  judg- 
ment      407 

receivers  over  partnerships 472-552 

principles  governing  the  relief 472-508 

the  jurisdiction  well  established 472 

doctrine  of  Lord  Eldon 472 

probability  of  dissolution  a  controlling  element       .     .  472 

courts  proceed  cautiously 473 

beneficial  nature  of  the  jurisdiction 473 

same  conditions  necessary  as  for  injunction  ....  474 

actual  abuse  must  appeal' 474 

quarrel  not  sufficient 474 

court  does  not  determine  ultimate  rights  of  partners 

on  application  for 475 

duty  of  court  only  to  preserve  property  pendente  lite  .  475 

existing  partnership  necessary 476 

receiver  refused  when  partnership  disputed  ....  476 

not  granted  in  nominal  partnership 476 


INDEX.  747 

PARTNERSHIPS  —  Continued.  Section- 

receivers  over,  employee  can  not  have 476 

right  to  participate  in  profits  the  test 477 

burden  of  proving  partnership  on  plaintiff    ....  477 
relief  not  granted  in  case  of  executory  agreement  to 

form  partnership 477 

■when  defendant  permitted  to  give  security  in  lieu  of 

receiver 478 

when  court  satisfied  of  existence  of  partnership,  mere 

denial  by  defendant  no  bar  to  relief 479 

management  of  business  not  province  of  court  .     .     .  480 
may  be  continued  by  receiver  pendente  lite  to  pre- 
serve good  will 481 

operating  steamboat 481 

hire  of  horses  and  carriages 481 

publication  of  political  paper 481 

court  only  interferes  in  clear  cases 482 

conflict  of  interest  must  be  shown 482 

effect  of  denials  in  answer 482 

breach  of   duty  or  violation  of   agreement  must  be 

shown 483 

irreconcilable  disagreement,  ground  for  relief     .     .     .  483 

destruction  of  mutual  confidence 484 

insolvency  of  firm 484 

■want  of  co-operation  no  ground  for 485 

unprofitable  business  no  ground  for 483 

receiver  not  a  matter  of  course 488 

not  granted  when  bill  alleges  no  facts  showing  necessity 

for 486 

defendant  resolved  to  ruin  business,  ground  for      .     .  487 
when  granted  though  doubtful  whether  property  in 

defendant's  possession  is  firm  property 488 

retiring  partner,  when  entitled  to 489,  493 

violation  of  agreement  for  dissolution     ....  489 

exclusion  from  books 489 

fraud  by  continuing  partner 493 

embittered  feeling 489 

partner  in  possession  not  entitled  to 490 

not  granted  when  equities  of  bill  denied  by  answer     .  491 
not  granted  over  property  claimed  by  plaintiff  individ- 
ually        492 

receiver  on  creditor's  bill,  extended  to  what  property  .  494 

appointment  of,  prevents  one  partner  giving  preference  495 

valid  liens  of  creditors  not  interfered  with    ....  495 
execution  creditor  not  deprived  of  rights  under  prior 

levy 493 


748 


INDEX. 


PARTNERSHIPS—  Co  ntinued.  Section 

receivers  over,  failure  to  contribute  to  capital  stock  ....  496 

sale  of  interest  in  firm 496 

insolvency  and  refusal  to  pay  firm  indebtedness      .     .  496 
large  sums  of  money  in  defendant's  bands  no  ground 

for  relief  in  absence  of  danger 497 

when  refused  over  shares  of  stock  constituting  assets 

of  firm 498 

continuing  business  with  firru  funds  after  dissolution, 

ground  for 499 

violation  of  agreement  in  lumber  business  as  ground 

for 500 

when  issue  as  to  partnership  directed  to  be  tried  at 

law 501 

when  issue  as  to  plaintiff's  right  to  profits  tried     .  501 

courts  averse  to  appointing  ex  parte 502 

foreign  partnerships,  when  allowed 503 

when  allowed  in  case  of  farm 504 

does  not  prevent  creditors  from  proceeding  at  law       .  505 

when  injunction  continued  as  auxiliary  to 506 

assigne3s  of  partners,  when  entitled  to 507 

limited  partnerships,  when  receiver  allowed       .     .     .  508 

dissolution  of  firm  as  ground  for 509-521 

English  rule  allowing  receiver  only  when  plaintiff  en- 
titled to  dissolution 509 

English  rule  followed  in  this  country 510 

courts  do  not  interfere  to  continue  business  .     .     .     .  510 

receiver  does  not  necessarily  follow  injunction  .     .     .  510 

when  injunction  necessary  adjunct  of 510 

inability  to  agree  after  dissolution 510 

right  to  dissolution  not  ground  per  se  for      .     .     .     .511 
partnership  determinable  by  consent  or  at  will,  receiver 

not  of  course 511 

relief  refused  when  defendant  has  advanced  entire  cap- 
ital      511 

insolvency    of    defendant    and    right    to    dissolution 

ground  for 511 

purchaser  at  sheriff's  sale  of  partner's  interest,  when 

denied .  512 

departure  from  agreement,  when  ground  for     .     .     .  513 

partners  in  theater,  when  receiver  appointed     .      .      .  513 
relief  denied  when  it  would  destroy  business  without 

benefit  to  either  party 514 

receiver  granted  when  both  partners  desire  dissolution 

and  plaintiff  is  excluded 515 

refused  when  answer  denies  equities  of  bill  ....  515 


INDEX.  740 

PARTNERSHIPS  —  Continued.  Section 

receiver  on  dissolution  of,  when  granted  against  continuing 

partner,  though  entitled  to  exclusive  possession       .  510 
dissolution  by  insolvency  and  assignment  by  insolvent 

partners  ground  for 517 

general  assignment  by  continuing  partner  for  benefit 

of  all  creditors  not  ground  for 518 

when  appointed  as  of  course  on  disagreement  as  to 

closing  up  business •   .     .     .     .  519 

debts  to  be  paid  ratably  and  without  preference      .     .  519 

may  be  appointed  on  final  judgment  for  dissolution    .  520 

failure  to  give  bond,  effect  of 520 

usually  granted  on  interlocutory  application      .     .     .  521 
injunction  frequently  granted  as  adjunct       .     .     .     .521 

exclusion  from  firm  as  ground  for 522-529 

exclusion  strong  ground  for 522 

doctrine  of  Lord  Eldon 522 

assignment  for  purpose  of  excluding  partner  ground  for  .  523 

assignee  can  not  defeat  application 523 

exclusion  from  profits,  ground  for 52-1 

not  necessary  that  fund  should  be  in  peril 525 

when  receiver  continued  on  ground  of  exclusion      .     .     .  525 
exclusion  of  purchaser  of  partner's  interest  ground  for  re- 
ceiver        526 

doctrine  of   exclusion  applied  to  assignees   of  bankrupt 

partner 527 

exclusion  from  profits  in  vessel 528 

exclusion  from  books 529 

refusal  to  settle  or  to  pay  firm  debts 529 

fraudulent  appropriation  of  funds 529 

death  of  partner  as  ground  for 530-537 

receiver  on  death  of  both  partners 530 

not  granted  against  survivor  except  for  mismanagement  .  531 

granted  for  improper  conduct  of  survivor       .  ,  .     .     .     .  532 

refusal  by  survivor  to  close  up  firm  business  ground  for    .  532 

when  administrator  of  deceased  entitled  to 533 

administrator  may  be  appointed 533 

form  of  decree 533 

survivors,  required  to  deliver  to 533 

enjoined  from  collecting  debts 533 

rights  and  functions  of  the  receiver 534 

when  legatee  of  deceased  partner  entitled  to 535 

receiver  appointed  notwithstanding  death  of  partner    .     .  536 

may  sue  for  money  due  firm 536 

when  appointed  on  bill  by  creditors  against  survivor  .     .  537 


750 


INDEX. 


PARTNERSHIPS  —  Continued.  Section 

receivers  over,  functions  and  duties  of 538-552 

duty  of,  to  collect  debts 538 

entitled  to  assets 538 

will  not  be  enjoined  from  management  of  fund  ....  538 
not  directed  to  take  property  when  doubtful  whether  part- 
nership property 538 

on  application  for,  court  will  not  determine  disputes  as  to 

ownership 538 

receiver  takes  whole  equitable  title  without  assignment     .  539 

may  bring  action  to  obtain  possession 539 

succeeds  to  equitable  rights  and  remedies  of  firm     .     .     .  539 

rights  of  action 539 

selection  of 540 

partner  may  act  as,  without  pay 540 

partner  appointed  receiver  no  longer  sustains  relation  of 

partner 540 

entitled  to  money,  choses  in  action  and  assets  in  hands  of 

survivors 541 

decree  for  delivery  of.  enforced  by  attachment  .     .     .  541 
can  not  withhold  partnership  funds  as  due  to  him  person- 
ally       542 

not  directed  to  sell  pending  appeal  as  to  jurisdiction  of 

court 543 

required  to  produce  books  of  account  before  master      .     .  544 
payment  of  debts  by,  sufficient  excuse  for  not  paying  money 

into  court 545 

appointed  to  collect  debts  which  partners  are  enjoined  from 

collecting 546 

may  be  required  to  pay  plaintiff  his  proportion  of  debts 

collected 546 

when  required  to  sell  lease  and  good  will  of  insane  hospital  547 

either  party  may  become  purchaser 547 

remaining  parties  enjoined  from  continuing  business  in 

same  locality 547 

appointed  over  husband  in  divorce  suit,  does  not  divest  title 

to  partnership  property 548 

duties  of,  in  brewing  business 549 

retiring  partner  compelled  to  pay  firm  notes  may  recover 

of  receiver  of  new  firm 550 

purchaser  of  partner's  interest  after  receivership  can  not 

interfere  with 554 

funds  in  hands  of,  not  subject  to  attachment  or  garnish- 
ment    552 

when  not  required  to  pay  deposit  in  full 552  a 


INDEX.  751 

PARTY,                                                                                                               Section 
to  the  cause,  ineligible  as  receiver 70 

PATENT  RIGHT, 

receiver  granted  in  suit  for  infringement 34 

receiver  entitled  to  rights  under 174  a 

PAYMENT, 

of  money,  receiver  not  granted  for 35 

receiver  not  directed  to  make,  until  claims  determined  .     .     .  428 

by  receiver  of  partnership,  to  be  made  ratably 519 

effect  of 545 

PEER, 

ineligible  as  receiver 70 

PENSION, 

receiver  refused  over 31 

when  allowed 705 

PERSONAL  PROPERTY, 

tenants  in  common  of,  courts  averse  to  allowing  receiver    .     .       20 
sale  of,  by  receiver,  discretion  as  to  sale  in  bulk  or  by  parcels  .     198 
distinction  between  realty  and  personalty  as  to  appointing 
receiver 554 

PETITION, 

receiver  not  granted  on 83 

PLEA, 

pending,  to  amended  bill,  no  bar  to  motion  for  receiver  ...       95 

PLEADINGS, 

in  actions  by  receivers,  appointment  should  be  alleged  issuably    231 
strictness  of  earlier  rule  as  to  particulars  necessary  to  be 

alleged 232 

averment  of  appointment  in  general  terms  now  sufficient    233 
receiver  should  state  equities  of  judgment  creditors  whom 

he  represents 234 

when  defendant  estopped  from  denying  receiver's  right  to 

sue  in  that  capacity 235 

in  action  by  receiver  on  premium  notes 236 

in  action  by  receiver  of  national  bank 237 

PLEDGE, 

of  notes  by  bank,  receiver  can  not  avoid 359 

POLICY  OF  INSURANCE.    (See  Insurance  Company.) 
POSSESSION, 

of  defendant,  divested  by  appointment  of  receiver    .     .     .     .  3,  15 

of  receiver,  that  of  court 4 

disturbance  of,  a  contempt 4 


752  INDEX. 

POSSESSION  —  Continued.  Section 

acquiescence  in,  as  a  bar  to  receiver 14 

receiver  cautiously  granted  against 19 

of  receiver  of  state  court,  respected  by  federal  court      ...  52 

when  denied  by  federal  court 53 

of  receiver  of  federal  court,  respected  by  state  court      ...  59 

not  disturbed  by  writ  of  assistance  from  state  court     .     .  Gl 

nature  of  receiver's  possession 131-163 

importance  of  determining 134 

receiver's  possession  that  of  court 134 

not  adverse  to  either  party 134 

regarded  as  possession  of  prevailing  party,  to  what  extent  135 

when  regarded  as  possession  of  plaintiff 135 

when  regarded  as  possession  of  mortgagee    ....  135 

does  not  affect  operation  of  statute  of  limitations     .     .     .  135 

vests  back  to  original  order  of  appointment 13G 

effect  of  appeal  on 136 

property  subject  to  garnishment  in  Maryland  until  reduced 

to  receivers  possession 137 

receiver  acquires,  subject  to  existing  liens 138 

can  not  be  disturbed  without  leave  of  court 139 

practice  as  to  obtaining  leave  of  court 139 

court  may  enjoin  unauthorized  interference  with     .     .     .  140 

can  not  be  interfered  with  by  execution 141 

receiver  not  allowed  to  pay  money  exept  by  order  of  court  142 
can  not  be  interfered  with  on  ground  that  appointment 

was  improper 143 

persons  desiring  possession  must  apply  to  court  ....  143 
receiver  entitled  to  aid  of  court  to  obtain  possession      .     .  144 
practice  in  obtaining  possession  of    real  property  by  re- 
ceiver  .  144,  147 

order  for  surrender  to  receiver  may  be  enforced  by  attach- 
ment   144 

defendant's  attorney  required  to  deliver  trust  property  to 

receiver 144 

court  reluctant  to  take  possession  by  receiver  as  against 

purchasers  in  good  faith  who  are  not  parties     ....  145 
persons  claiming  real  estate  held  by  receiver  will  be  heard 

by  the  court 146 

receiver  allowed  to  take  steps  to  procure  possession  of  prop- 
erty      148 

receiver  not  allowed  writ  of  assistance  as  against  stranger 

claiming  under  superior  title 149 

duty  of  court  to  protect  receiver's  possession 150 

practice  where  receiver    forcibly  takes    possession  from 

party  holding  under  claim  of  right 150 


INDEX.  753 

POSSESSION  —  Continued.                                                               Section 
nature  of,  funds  in  receiver's  possession  not  subject  to  garnish- 
ment   ' 151 

assets  not  in  possession  subject  to  garnishment    .     .     .     .     151 
precedence  in  possession  as  between  different  receivers      .     152 
possession  as  between  receiver  and  assignee  in  bankruptcy    153 
right  of  common  not  allowed  as  against  possession  of  re- 
ceiver       154 

right  to  possession  as  between  receiver  of  an  auctioneer 

and  customer 153 

goods  in  receiver's  possession,  when  not  subject  to  distraint 

for  rent 150 

receiver  over  property  of  decedent,  not  entitled  to  fund 

held  by  creditor  as  security 157 

when  receiver  entitled  to  possession  of  wharf  in  front  of 

mills 15$ 

receiver's  possession  of  commercial  paper,  not  that  of  bona 

fide  holder 159 

placing  property  in  receiver's  possession  relieves  defendant 

from  responsibility 1G0 

receiver  may  retain  possession  pending  appeal     ....     101 
receiver's  possession  that  of  trustee  for  person  entitled  un- 
der final  decree 162 

when  receiver  required  to  deliver  possession  to  trustee  of 

defendant  under  insolvent  laws 102 

receiver  required  to  restore  fund  on  reversal  of  his  appoint- 
ment   162 

right  of,  when  property  taken  beyond  state 162  a 

interference  with  receiver's  possession 163-174 

unauthorized  interference  a  contempt  of  court,  punishable 

by  attachment 163 

landlord  guilty  of  contempt  in  seizing  property  under  dis- 
tress warrant 163 

duty  of  court  to  protect  receiver  against 164 

by  another  receiver  subsequently  appointed,  punished  as  a 

contempt 164 

liability  for,  not  dependent  upon  propriety  of  appointment     165 

not  dependent  upon  formal  notice 160 

collection  of  rents 167 

refusal  of  defendant  to  surrender  property  to  receiver       .     168 
refusal  of  purchaser  at  sheriff's  sale  to  surrender  posses- 
sion to  receiver 168 

court  itself  the  only  competent  judge  as  to  contempt    .     .     169 
contempt  in  resisting  enforcement  of  order  for  receiver 

over  property  in  foreign  country 170 

48 


754  INDEX. 

POSSESSION—  Continued.  Section 

interference  with,  actual  disturbance  of  possession  necessary  to 

contempt " 171 

levy  and  sale  by  sheriff  considered 171 

receiver's  title  not  determined  on  proceedings  for  contempt  172 
claimant  required  to  pay  for  property  taken  out  of  state  .  172 
courts  averse  to  punishing  receiver  for  contempt  in  inter- 
ference with  other  receiver 173 

attachment  against  receiver  for  refusing  to  surrender  posses- 
sion        174 

of  real  property,  receiver  rarely  granted  against 557 

acquiescence  bars  receiver 560 

by  lessee,  receiver  rarely  granted  against 562 

fraud  in  obtaining  possession,  ground  for 565 

POVERTY, 

of  executor,  no  ground  for  receiver 709 

POWER, 

of  appointing  receiver,  high  nature  of 3 

inherent  in  courts  of  equity 9 

when  may  be  invoked 9 

PRACTICE, 

general  rules  of 82-102 

divergent  in  different  states 82 

receiver  appointed  only  on  bill 83 

not  appointed  on  application  of  defendant 83 

bill  need  not  contain  specific  prayer  for  receiver 83 

appointment  may  be  made  on  final  hearing 83 

motion  necessary 84 

affidavits,  copies  should  be  served 84 

in  behalf  of  plaintiff,  admissible  after  answer     ....  85 

admissible  to  explain  doubtful  passage  in  answer     ...  85 

multifarious  bill  no  objection  to  motion 86 

insufficient  record  no  objection 86 

order  should   state  over  what  property  receiver  is  ap- 
pointed      87 

facts  need  not  be  stated  in  the  pleadings 88 

may  be  set  forth  in  affidavits 88 

facts  on  which  receiver  is  asked  may  be  presented  in    .     .  88 

copies  of,  when  should  go  to  appellate  court 88 

should  be  distinct  and  precise 89 

when  not  necessary  as  to  insolvency  of  bank       ....  89 

reference  to  master  to  appoint,  practice  on 90 

when  appointment  complete 90 

practice  in  objecting  to 90 


INDEX.  tDO 

PRACTICE  —  Continued.  Section- 

leave  granted  to  renew  motion 91 

receiver  may  be  appointed  on  rehearing  on  new  proof    ...  91 

rehearing,  allowed  after  appointment 92 

when  not  granted  in  creditor's  suit 92 

extending  receiver,  for  protection  of  other  parties     ....  93 

regarded  as  a  new  appointment 93 

appointment  by  consent,  under  Irish  practice 91 

when  consent  not  made  a  rule  of  court 94 

demurrer  to  bill,  no  objection  to  appointment  when  defendant 

does  not  appear 95 

motion  entertained,  although  plea  to  amended  bill  undisposed 

of 95 

when  application  must  be  heard  in  court 96 

when  in  chambers 96 

regularity  of  proceeding  can  not  be  questioned  on  motion  to 

substitute  receiver 97 

receiver  may  be  appointed  though  application  was  for  an  in- 
junction      93 

order  of  appointment  should  not  include  application  of  pro- 
ceeds of  sale 199 

bill  may  be  dismissed  although  receiver  appointed     ....  101 
appointment  may  be  made,  unless  defendant  satisfies  plaint- 
iffs demand 1°3 

time  of  appointment 103-110 

formerly  only  after  answer 103 

modern  practice,  before  answer •  103 

grounds  of  interference  before  answer 104, 105 

granted  before  answer  in  this  country  .     .    , 105 

strong  ground  required  for  receiver  before  answer   .     .     .  106 

motion  before  answer  heard  on  affidavits 107 

defendant  heard  by  affidavit  in  reply 107 

appointment  will  not  date  back  by  relation 108 

may  be  made  at  final  hearing 109 

the  same,  though  bill  does  not  pray  receiver 109 

may  be  made  after  final  decree 110 

notice  of  application 111-117 

courts  averse  to  interference  without Ill 

error  to  appoint  receiver  without 112 

want  of,  ground  of  reversal 112 

how  taken  advantage  of 112 

appeal  because  of 112 

grounds  of  interference  without 113 

facts  on  which  application  is  made  ex  parte  should  clearly 


appear 


113 


756  INDEX. 

PRACTICE  —  Continued.  Section 

notice  of  service  of  process  considered Ii4 

notice  necessary  to  appointment  over  insolvent  corporation  115 

practice  of  New  York  Court  of  Chancery  as  to   .     .     .     .  115 

service  of 116 

■when  sufficient  on  co-defendant .  110 

not  necessary,  when  parties  appear  by  counsel  to  resist 

motion 116 

unnecessary  when  defendant  has  absconded 117 

when  defendant  has  left  state  and  receiver  is  necessary 

to  collect  rents 117 

against  trustee  defendant  beyond  jurisdiction  of  court  117 

on  vacating  bond  as  to  one  surety 127 

on  claiming  property  or  fund  held  by  receiver     ....  139 
in  obtaining  possession  of  real  property  by  receiver       .     .  144 
on  proceedings  in  attachment  for  interfering  with  collec- 
tion of  rents  by  receiver 167 

on  application  by  receiver  for  advice  of  court      ....  188 

on  obtaining  leave  by  receiver  to  bring  suit 208 

in  continuing  suit  by  successor  of  receiver 213 

in  appointing  receiver  over  insolvent  corporation     .     .     .  340 

PRECEDENCE, 

in  possession,  as  between  different  receivers 152 

PRELIMINARY  INJUNCTION.    (See  Injunction.) 

PREMIUM  NOTE, 

when  receiver  can  not  sue  on 204 

pleadings  in  action  by  receiver  on 236 

set-offs  in  actions  by  receivers  on 247 

defense  to  suit  on 318 

assessments  on,  receivers  right  of  action  for 326 

what  receiver  must  allege  and  prove 327 

liability  not  increased  by  receivership 328 

receiver  must  make  assessment  and  apportionment       .     .  328 

receiver  takes  place  of  directors 329 

sanction  and  approval  of  court 329 

receiver  acts  ministerially,  not  judicially 330 

may  make  second  assessment 330 

approval  by  court  not  judicial  act 330 

form  of,  when  general  on  all  notes 331 

proof  of  losses,  what  required 331 

receiver  may  sue  on,  to  pay  equitable  claims 332 

defense  by  maker,  what  not  allowed 332 

PRESIDENT, 

of  corporation,  when  eligible  as  receiver 72 


INDEX. 


757 


PRINTING  OFFICE,                                                                              Section 
receiver  refused  as  between  joint  owners 20 

PRIORITY, 

in  possession,  as  between  different  receivers 152 

PROBATE  OF  WILL.    (See  Will.) 

PROCESS, 

service  of,  qacere  as  to  necessity  for  before  appointing  receiver    114 

PROFITS, 

in  partnership  cases,  right  to  as  test  for  receivership       .     .     .     477 

when  issue  to  be  tried  by  jury 501 

exclusion  from,  ground  for  receiver 524,  528 

PROHIBITION, 

remedy  by,  against  unauthorized  appointment 43 

PROMISSORY  NOTES.    (See  Co^diercial  Paper.) 

PROTECTION, 

of  court,  against  interference  with  receiver's  possession  .  .164 
receiver  entitled  to,  in  performance  of  duties  ....  179 
extended  to  custodians  occupying  relation  of  receivers      .     182 

PROVISIONAL  REMEDY, 

receivership  considered  as  a 6,  49 

PUBLICATION, 

of  newspaper,  by  receiver 481 

PUBLIC  OFFICE.    (See  Office.) 

PURCHASE.    (See  Sale.) 

PURCHASER,    (See  Innocent  Purchasers.) 

at  receiver's  sale,  acquires  no  right  of  action  against  former 

officer  of  corporation 350 

of  partner's  interest,  when  denied  receiver 512 

when  allowed  receiver 520 

can  not  interfere  with  receiver 551 

receivers  as  between  vendors  and  purchasers  of  realty   .     .  609-617 

allowed  vendor  on  bill  for  specific  performance  ....  609 

vendee  on  same 610 

allowed  vendor  on  bill  against,  to  recover  possession  for 

non-payment ....  611 

purchaser  allowed  receiver  on  bill  to  perfect  title      .     .     .  612 
when  purchaser  at  sheriff's  sale  allowed  receiver  and  in- 
junction    "1" 

of  gold  mine  at  mortgage  sale,  when  granted  receiver  .     .  614 


758 


INDEX. 


PURCHASER  —  Continued.  Section 

of  colliery,  entitled  to  receiver,  on  bill  to  set  aside  purchase  for 

fraud 61% 

receiver  not  allowed  over  realty  against  purchasers  not 

made  parties 616 

■when  receiver  required  to  return  purchase  money  on  an- 
nulling purchase 617 

at  receiver's  sale,  title  acquired  by 630 

what  sufficient  to  see 630 

not  affected  by  errors 63G 

Q. 

QUO  WARRANTO, 

receiver  refused,  pending  controversy  in 21 

against  corporation,  receiver  not  allowed  before  judgment  of 

forfeiture 307 

injunction  allowed  pending 307 

R8 

RAILROADS.    (See  Railways.) 
RAILWAYS, 

appointment  of  receiver  over,  when  not  appealable  ....  26 

in  different  states,  receiver  over 44 

receiver  in  state  court,  bill  for  account  not  entertained  by 

United  States  court 55 

receiver  of  United  States  court,  not  subject  to  control  of  state 

court 59 

action  against,  in  state  court 6Q 

enjoined  from  condemning  land  held  by  receiver 140 

receivers  over,  principles  governing  the  jurisdiction  .     .     .  365-375 

courts  reluctant  to  appoint 365 

not  appointed  for  creditor  who  can  enforce  his  judgment 

by  ordinary  means 365 

consolidation  of  companies 365 

appointed  on  bill  by  shareholder  to  set  aside  void  lease.     .  366 

granted  to  protect  vendor's  lien .  367 

granted  for  management  of  common  easement  ....  368 

in  case  of  tunnel 368 

when  refused  on  bill  to  recover  for  illegal  shares  of  stock  .  369 
appointed  by  state  court,  when  not  interfered  with  by 

United  States  court  in  bankruptcy 370 

jurisdiction  as  between  state  and  federal  courts  ....  370 

two  receivers  not  desirable ,370  a 


INDEX.  T59 

RAILWAYS  —  Continued.  Section 

receiver  over,  receivership  does  not  dissolve  corporation      .     .3706 

injunction  against  company  binds  receiver 370  b 

taxes  enforced 370  b 

appointed  on  failure  to  operate  road 371 

before  default 371 

when  relieved 371 

vendor's  rights  not  disturbed  by 372 

distraint  for  rent  notwithstanding 372 

may  enjoin  state  officers  from  disposing  of  land  grant       .     373 

interference  with  trains  punished 373 

stockholders'  meeting    ...  373 

appointed  by  state  court,  United  States  court  will  not  enter- 
tain bill  for  account  against 374 

mandamus  refused 374 

order  for,  vacated,  road  restored  to  owner 375 

in  aid  of  mortgagees  and  bondholders 376-389 

relief  based  on  same  principles  as  in  foreclosure  of 

mortgages 376 

inadequacy  of  security  and  insolvency  ground  for  .     .     376 

neglect  to  apply  earnings  as  ground  for 376 

non-payment  of  interest  and  inadequacy  of  security  as 

ground  for 376 

not  matter  of  course  on  default       .......     377 

not  granted  where  it  would  cause  irreparable  injury  .     377 

proceedings  for,  regarded  as  in  rem 378 

right  of,  extends  only  to  property  mortgaged     .     .     .     378 

may  lease  other  lines 378 

right  to  take  possession  on  default 379 

refusal  of  trustee  to  take  possession 379 

appointed  after  decree  of  foreclosure 379 

receiver  over  tolls 380 

when  bondholders  entitled  to 381 

right  to,  as  between  different  mortgagees  .  .  382,  385 
mortgagees  pari  passu,  not  allowed  preference  .  383 
granted  in  behalf  of  state  holding  mortgage  .  .  .  384 
granted  to  prevent  land  grant  from  lapsing  ....  386 
validity  of  bonds  not  determined  on  application  for  .  387 
jurisdiction  of  state  and  federal  courts  in  applications 

for 388 

court  first  acquiring  jurisdiction  will  retain  it    .     .     .     388 
jurisdiction  of  United  States  court  over  consolidated 

road 388a 

when  president  and  directors  regarded  as  receivers      .  388  b 
discharge  of,  on  payment  of  mortgage 389 


760  INDEX. 

RAILWAYS  —  Continued.  Section 

receiver  over,  functions  and  duties  of 390-39S 

duties  usually  prescribed  by  order 390 

what  usually  embraced  in 390 

when  authorized  to  complete  road 390 

contracts  subject  to  control  of  court 390  a 

can  not  prevent  construction  of  rival  line 390  a 

when  not  allowed  to  pay  prior  debts 391 

discretion  of,  as  to  expenditures 393 

what  outlays  allowed  in  accounts 393 

entitled  to  protection  of  court 393 

court  will  enjoin  diversion  of  earnings  from      .     .     .     393 
must  enforce  rights  of  action  by  appropriate  reme- 
dies   394 

must  bring  suit  at  law  to  enforce  subscription  .     .     .     394 
rights  limited  to  property  covered  by  mortgage.     .     .     394 

preferred  debts 394  a-394  i 

preference  to  unsecured  debts  indefensible  on  principle      .  394  a 

receiver's  expenses  a  prior  charge 394  b 

extension  of  line 394  b 

damages 394  b 

rentals 394  b 

diversion  of  income  ground  of  preference 394  c 

preference  independent  of  diversion 394  d 

materials  furnished  company  and  used  by  receiver  .     .     .  394  d 
mortgagee  must  submit  to  equitable  conditions  ....  394  e 

assignee  of  debt  protected 394  e 

claims  for  rolling  stock,  when  preferred 394/ 

car-trust  leases     .  394/ 

sale  of  rolling  stock  under  foreclosure 394/ 

judgment  creditors,  when  allowed  priority 394  g 

general  creditors  not  preferred 394  h 

statutory  liens  preserved 394  i 

interest,  when  disallowed  against  receiver 394  i 

actions  against  receivers  of 395-398  6 

liable  to  same  extent  as  railway 395 

leave  of  court  necessary  to  sue 395  a 

practice  by  petition 395  a 

New  York  decisions  unsettled 395  b 

liability  for  injuries 3956 

rent  of  leased  lines 395  b 

company  not  liable  for  negligence  of  receiver's  servants    .     396 
statutory  liability  of  company,  notwithstanding  receiver- 
ship   397 

judgment  for,  how  enforced 397 


INDEX. 


:oi 


RAILWAYS  —  Cont  inucd.  Section- 

actions  against  receivers  of,  liable  generally  as  common  carriers    39S 

suit  in  other  state ouo 

for  right  of  way 398  " 

not  liable  on  contract  with  express  company      .     .     .  3'JS  a 

after  discharge 398  b 

liability  of  purchasers 398  b 

receivers' certificates 398c-398<y 

unsupported  by  principle 39a  e 

warranted  by  authority 398  e 

purposes  for  wliich  issued 39S  ( ' 

order  strictly  construed 398  d 

not  commercial  paper OJO  c 

innocent  purchasers  not  protected 398  c 

when  bondholder  estopped  from  questioning 398/ 

sale  subject  to 39S  <y 

purchasers  concluded 398  0 

compensation  of  receiver  of f°' 

considerations  governing ^8* 

RATES, 

receiver  refused  over 32 

REAL  ESTATE.    (See  Real  Property.) 

REAL  PROPERTY, 

receiver  appointed  to  collect  rents  of,  after  decree      .     .     .     .  HO 

receiver  extended  over,  new  security  required 123 

practice  in  obtaining  possession  of,  by  receiver       ....  144,  147 
in  receiver's  possession,  claimants  will  be  heard  by  court     .     .  146 
rights  of  common  not  allowed  to  be  exercised  as  against  posses- 
sion of  receiver 1°"* 

motion  to  let,  should  not  come  from  receiver 181 

when  receiver  not  allowed  to  purchase  at  sale  of 193 

when  receiver  allowed  to  become  tenant  of  lands  subject  to  re- 
ceivership        ™,} 

6ale  of,  by  receiver,  power  to  give  deed  implied 199 

confirmation  of  conveyance  by  court 1" 

ejectment  for,  receiver  must  obtain  leave  to  bring     ....  208 
receiver  of,  can  not  maintain  action  of  forcible  entry  and  de- 
tainer in  his  own  name ~™ 

contrary  doctrine  recognized 210 

distinction  between  actions  by  receiver  concerning  title,  and 

concerning  injury  to  or  possession  of  real  estate      .     .     .     .221 
action  by  receiver  to  set  aside  fraudulent  conveyance  made  to 

defeat  decree  for  alimony 221 

to  recover  balance  of  purchase  money 223 

assignment  of,  receiver's  right  of  action  under 244 


762  INDEX. 

REAL  PROPERTY—  Continued.  Section 

loss  to,  remaining  in  owner's  possession,  who  in  fault     .     .     .  284 

long  acquiescence  in  situation  of  title,  bar  to  receiver     .     .     .  295 

of  corporation,  not  divested  by  receiver  pendente  lite      .     .     .  302 

vests  in  receiver  on  dissolution  of  corporation  in  New  York  303 

lien  of  judgment  creditor  on,  as  affected  by  receivership  .  349 
of  debtor,  claimed  by  third  party,  courts  averse  to  interfering 

by  receiver  on  creditor's  bill 416 

debtor  can  not  create  trust  in,  to  prejudice  of  creditors  .     .     .  417 

when  receiver  appointed  over,  in  behalf  of  creditors  ....  418 

in  receiver's  possession,  regarded  as  in  custody  of  court       .     .  422 

of  debtor,  receiver  takes  subject  to  judgment  hens    ....  424 

when  title  vests  in  receiver 447 

receivers  over 553-638 

principles  on  which  the  relief  is  granted 553-602 

jurisdiction  well  established  but  cautiously  exercised  .  553 
English  doctrine  denying  receiver  except  in  aid  of 

equitable  title 554 

distinction  in  cases  of  realty  and  personalty  ....  554 
not  appointed  as  between  conflicting  claimants  to  pos- 
session         554 

outstanding  terms  no  additional  ground  for     .     .  554 

not  granted  when  remedy  at  law 555 

devisee  not  entitled  to,  when  he  can  obtain  redress  at 

law 555 

appointment  does  not  affect  title  of  either  party     .     .  556 

object  of  the  appointment 556 

for  whose  benefit  made 556 

does  not  prevent  statute  of  limitations  from  running  .  556 
general  rule  denying  receiver  against  defendant  in  pos- 
session under  claim  of  title 557 

exceptions  to  the  rule 558 

probability  of  plaintiff  prevailing     ....  558 

danger  to  rents  and  profits 558 

refused  when  defendant  claims  legal  and  equitable  title  559 

refused  when  only  ground  is  defendant's  insolvency    .  559 

effect  of  long  acquiescence  in  defendant's  possession  .  560 
not  appointed  when  notice  of  lis  pendens  will  prevent 

transfer  pendente  lite 561 

not  granted  against  possession  of  lessee 562 

danger  to  property  must  be  shown 563 

when  refused  in  case  of  dissension  in  religious  society  563 

in  possession,  may  be  continued  pending  compromise  .  564 

fraud  in  obtaining  possession  ground  for 565 

granted  when  plaintiff  shows  legal  and  equitable  title, 

and  defendant  none 566 


INDEX. 


763 


REAL  PROPERTY  —  Continued.  Section 

receivers  over,  prevention  of  vexatious  litigation  ground  for  .  566 

defendant's  abuse  of  trust  and  insolvency  ground  for  566 
when  granted  on  bill  by  creditors  to  charge  debtor's 

realty 567 

in  aid  of  incumbrancer,  -will  not  prejudice  judgment 

creditors  in  possession 567 

granted  when  plaintiff  shows  probable  title  and  danger 

to  rents 567 

when  granted  to  protect  dower  interests 568 

for  protection  of  heirs  and  devisees 568-573 

granted  to  enforce  trusts  of  will 569 

when  granted  against  heir-at-law  in  possession      .  569 

when  denied  legatee  under  will 569 

contest  between  heir  and  devisee,  when  receiver 

refused 570 

when  granted 570 

when  refused  heirs  on  grantor's  taking  possession 

after  life  estate 571 

opposition  by  heirs  to  administration,  no  ground 

for 571 

when  granted  against  tenant  for  life 573 

vendor  seeking  to  rescind  imprudent  contract  of  sale 

not  entitled  to 573 

when  granted  in  behalf  of  annuitants 574 

,»                             granted  over  clergyman's  benefice 574 

annuitant  denied  receiver  when  he  can  distrain     .  574 

pending  contest  as  to  will 574 

in  actions  of  ejectment  and  to  recover  lands      .     .  575-577 

not  granted  in  absence  of  equitable  grounds     .     .  575 

granted  to  preserve  rents  and  profits 570 

stronger  ground  for,  after  verdict 577 

granted  pending  certiorari  from  state  to  federal 

court 577 

appointed  over  leasehold  interests 57S 

landlord  may  re-enter  without  leave  of  court  .     .  581 

assignee  of  lease  not  entitled  to 579 

insolvency  of  defendants  no  ground  for   receiver  of 

house  on  leased  ground 580 

when  defendant  to  be  served  with  notice  of  motion  to  dis- 
charge       581 

extending  same  receiver  to  subsequent  applications       .  532,  583 

new  security  required 582 

when  not  done  before  answer 582 

extension  deemed  new  appointment 583 

effect  of,  on  rents 583 


764  KTDIiX. 

REAL  PROPERTY  —  Continued.  Section- 

receivers  over,  dissensions  among  trustees,  when  ground  for    .  584 

denial  of  trust  not  necessarily  ground  for     ....  584 

granted  in  aid  of  equitable  incumbrancers      ...           .  585 

to  enforce  rent-charge 585 

not  allowed  in  mechanic's  hen  suit 586 

when  granted  in  aid  of  proceedings  in  bankruptcy  .     .     .  587 

conflicting  claims  to  trust  property  ground  for     ....  588 

nature  of  defendant's  interest  in  the  realty 589 

when  refused  over  crops 590 

when  allowed 590 

in  cases  of  marriage  settlements 591 

difficulty  in  enforcing  remedy  to  collect  rents  no  ground 

for 592 

acquiescence  in  defendant's  possession  a  bar  to    ...     .  593 

granted  when  property  escheated  to  state 594 

refused  when  defendant  consents  to  pay  rents  into  court  .  595 

only  party  to  cause  can  object  to 596 

remainder-man  and  tenants  can  not  enjoin  receiver  from 

turning  them  out 596 

how  possession  obtained  by 597 

loss  through  owner  remaining  in  possession 597 

appointed  before  answer  in  emergency 598 

over  corporation,  title  to  realty  not  divested  in  limine  .     .  599 

divested  on  dissolution  .     .         599 

order  should  point  out  particular  property 600 

may  be  appointed  over  part  of  property 600 

ordered  to  deliver  funds  to  plaintiff  obtaining  final  judg- 
ment    601 

on  termination  of  functions  realty  again  subject  to  lien  of 

judgment 602 

receiver  allowed  against  plaintiff  suing  in  forma  pauperis  602  a 

tenants  in  common 603-608 

courts  averse  to  granting  receiver 603 

when  refused 603 

exclusion  by  co-tenant  ground  for 604 

insolvency 604 

receiver  allowed  over  moiety 005 

allowed  in  default  of  defendant  giving  security  ....  605 

equitable  tenants  in  common 605 

allowed  in  case  of  colliery 606 

gold  mine 606 

action  for  partition G07 

notice  to  under-tenants  not  to  pay  rent  to  plaintiffs  no 

ground  fcr 608 

vendors  and  purchasers 609-617 


INDEX. 


705 


REAL  PROPERTY  —  Continued.  Section 

vendors  and  purchasers,  when  vendor  entitled  to  receiver  on 

bill  for  specific  performance G0° 

when  vendee  entitled 

vendor  entitled  to,  in  suit  to  recover  possession  for  non-pay- 

4.                                                                             ....     611 
merit 

wben  allowed  purchaser  on  bill  to  perfect  title     ....     612 

when  purchaser  at  sheriff 's  sale  entitled  to CIS 

purchaser  of  gold  mine  at  mortgage  sale  allowed  receiver    614 
purchaser  of  colliery  entitled  to,  on  bill  to  set  aside  pur- 
chase for  fraud 

when  receiver  of  mine  discharged 

not  allowed  over  realty  as  against  purchasers  not  parties  .     616 
when  receiver  required  to  return  purchase  money  on  an- 
nulling purchase ' 

functions  of  receiver 618-633 

right  to  rents 

tenants  required  to  attorn  to 

right  to  rents  in  arrear 

motion  for  tenants  to  attorn,  when  ordered  to  stand  over  .     620 

.     .     .     620 
costs  on 

effect  of  order  on  tenants  to  pay  receiver 621 

payment  to  third  person V*L 

right  to  distrain,  no  settled  practice 623 

not  allowed  to  distrain  when  plaintiff  still  proceeds  at 

law 623 

must  notify  tenants  of  appointment  before  suit  for  rent    .  624 

attachment  for  refusal  to  pay  rent  to    ......     .  625 

must  be  discharged  before  receiver  can  distrain,  and 

vice  versa 

rights  of  third  persons  not  determined  on     ....  627 

not  issued  pending  abatement  of  suit  by  death  ...  627 

effect  of  authorizing  defendant  to  collect  rents    .     ...  628 

receiver  should  invest  rents "^y 

rights  of  claimants  of "~ 

who  entitled  to  rents  of  corporate  property 630 

receiver  continued  for  collection  of,  until  conveyances  ex- 

ecuted G3* 

should  pay  rent  due  landlord G33 

right  to  make  repairs Vo° 

dutv  of,  when  waste  committed 634 

(V14 
injunction 

may  file  bill  to  sell  free  from  liens fi35 

purchaser  at  receiver's  sale,  rights  of 


what  sufficient  to  see 
not  affected  bv  errors 


636 
636 


766  INDEX. 

REAL  PROPERTY  —  Continued.  Section 

functions  of  receiver,  may  enjoin  tenant  from  using  premises 

for  purposes  forbidden  by  lease 637 

permission  of  court  to  lease  premises 638 

rent  due  third  parties 638  a 

dilapidations 638  a 

receiver  ordered  to  surrender  to  new  trustees 704 

RECEIVERS'  CERTIFICATES, 

in  railway  foreclosures 398  c-398  g 

unsupported  by  principle 398  c 

sustained  by  authority 398  c 

purposes  for  which  issued 398  d 

not  commercial  paper 398  e 

innocent  purchasers  not  protected 398  c 

when  bondholder  estopped  from  questioning 398/ 

sale  subject  to 398  g 

RECOGNIZANCE, 

usually  required  of  receiver  before  entering  on  duties     .     .     .     118 

two  sureties  required  under  English  practice 118 

of  receiver  alone,  when  allowed    .     . 119 

may  be  filed  nunc  pro  tunc 121 

liability  of  sureties  on 127-133 

may  be  vacated  as  to  one  surety 127 

practice  on  so  vacating 127 

on  death  of  one  surety  on,  new  one  required 128 

liability  on,  when  absolute 129 

when  action  may  be  sustained  on 129 

suit  on,  after  death  of  receiver 130 

judgment  on,  enjoined  after  full  amount  due  is  paid  by  surety    131 
REFERENCE.    (See  Master  in  Chancery.) 

REGISTER  OF  COURT, 

not  allowed  to  appoint  receiver 43 

REHEARING, 

receiver  may  be  appointed  on 91 

additional  proof  requisite  on 91 

may  be  allowed  after  appointment 92 

when  not  granted  in  creditor's  suit 92 

RELATIONSHIP, 

effect  of,  in  selecting  receiver 67 

as  to  removal 821 

RELIGIOUS  SOCIETY, 

dissension  in,  when  receiver  refused 563 

REMAINDER-MAN, 

can  not  enjoin  receiver  from  turning  him  out  ......    596 


INDEX. 


"i '  7 


REMEDY  AT  LAW..  Section 

a  bar  to  appointing  receiver 

difficulty  of,  no  ground  for  receiver 10,  592 

laches  in  resorting  to,  no  ground  for  receiver 1° 

bar  to  receiver  in  aid  of  creditor  of  corporation 301 

must  be  exhausted  before  receiver  appointed  on  creditor's  bill  .     403 

bars  receiver  over  real  property     .     .     .  , 5o;5 

REMOVAL,    (See  Dischaege.) 

of  receiver,  for  cause 8JJ-831 

power  of  court  considered 820 

rests  in  discretion °~L 

relationship  to  parties,  not  ground  for 821 

when  ground  for,  with  other  circumstances  .  .  .  .821 
not  removed  to  make  way  for  agents  of  parties  .  .  .  822 
employment  of  counsel  for  parties  not  ground  for  .     .     .     823 

courts  always  open  for "~™ 

by  vacating  appomtment Cli'± 

written  notice  of  motion  required 824 

decision  on,  not  appealable °^5 

allowed  pending  motion  for  new  trial 825 

analogous  to  dissolution  of  injunction 826 

substitution  by  consent 82 1 

removal  of  several  and  extending  one 827 

of  receiver  of  bank  who  was  shareholder  and  director       .     828 
in  creditor's  suit,  employment  of   debtor  to  collect  not 

QOQ 

ground  for °~° 

compelled  to  make  restitution  on 829 

receiver  not  heard  in  opposition  to 830 

when  defendants  estopped  from,  by  their  own  agreement  .     831 
diligence  necessary  in  application  for 831  a 

RENTS,    (See  Real  Property.) 

receiver  to  collect,  may  be  appointed  after  decree      ....     110 

receiver  of,  pending  action  for  divorce 146 

landlord  can  not  distrain  for,  when  goods  have  passed  into  re- 
ceiver's possession  lu" 

receiver  to  collect,  his  duty  to  move  for  attachment  in  interfer- 
ing with _ 10^ 

when  party  not  liable  for  contempt  in  collecting  .     .     .     .     .     167 
receiver  may  collect  rents  until  removal,  although  cause  is 

abated 1S) 

action  by  receiver  to  recover,  notice  to  tenant  of  appointment 

.     223 
necessary       

when  receiver  liable  for ~'" 

due  from  firm,  when  receiver  not  liable  for      ......  281 

loss  of,  solicitor  acting  as  receiver  without  appointment  liable 

for       284 


7G8  ixdex. 

RENTS  —  Continued.  Section 

of  corporate  property,  right  to,  after  receivership      ....  351 

vendor  of  lands  to  railway,  when  may  distrain  for    ....  372 

of  debtor's  building,  receiver  allowed  on  creditor's  bill  .     .     .  417 

from  sub-tenants,  when  receiver  directed  to  pay  to  landlord    .  470 

receiver  over,  pending  ejectment 57G 

after  verdict  for  recovery  of  lands 577 

of  leasehold  interests 578 

assignee  of  lease  not  entitled  to 579 

right  to,  when  receiver  extended  to  other  applications    .     .     .  583 

when  cestui  que  trust  entitled  to  receiver  over 58 1 

receiver  over,  not  allowed  in  mechanic's  lien  suit       ....  586 

in  aid  of  proceedings  in  bankruptcy 587 

denied  in  case  of  marriage  settlements    ■ 591 

not  granted  because  of  difficulty  in  enforcing  legal  remedy  593 

granted  when  property  escheated  to  state 594 

appointed  before  answer  in  emergency 598 

in  case  of  exclusion  by  tenant  in  common G04 

receiver  allowed  over  moiety COS 

allowed  in  default  of  defendant  giving  security       .     .     .  605 

receiver's  right  to G18 

tenants  compelled  to  attorn  to 618 

right  to  arrears 619 

motion  for  tenants  to  attorn,  when  ordered  to  stand  over  .  620 

costs  on 620 

effect  of  order  on  tenants  to  pay  to  receiver 621 

effect  of  payment  to  third  person 621 

right  to  distrain,  practice  unsettled 622 

not  allowed  to  distrain  when  plaintiff  still  proceeds  at  law  623 

must  notify  tenants  of  appointment  before  bringing  suit  for  C'2 4 

attachment  against  tenant  for  refusing  to  pay     ....  625 

must  be  discharged  before  receiver  can  distrain,  and 

vice  versa 626 

rights  of  third  persons  not  determined  on      ...     .  627 

not  issued  pending  abatement  of  suit  by  death  .     .     .  627 

effect  of  permitting  defendant  to  collect  rents     ....  628 

receiver  should  invest  rents 629 

rights  of  claimants  of 629 

who  entitled  to  rents  of  corporate  property 630 

receiver  continued  for  collection  of,  until  conveyances  ex- 
ecuted       631 

receiver  should  pay  rent  due  landlord 632 

of  mortgaged  premises,  receiver  of,  not  allowed  when  security 

adequate 042 

allowed  when  security  inadequate  and  mortgagor  in- 
solvent    G43 


INDEX. 


7«.9 


RENTS  —  Continued.  Suction 

n  of  mortgaged  premises,  mortgagor  entitled  to  rents  in  receiver's 

hands  to  make  up  deficiency 643 

past-due  rents '^•J 

when  entitled  to  unpaid  rents 644 

liability  for  waste  of,  by  receiver 645 

paid  into  court,  mortgagor  not  entitled  to,  on  receiver's  dis- 
charge       6o0 

right  to,  as  between  different  mortgagees 688,  089 

when  junior  mortgagee  entitled  to 0S3 

prior  mortgagee  entitled  to 688 

contrary  rule  in  Virginia 689 

assigned  to  junior  mortgagee,  prior  mortgagee  can  not 

have  receiver  of 690 

receiver  of,  allowed  on  bill  by  junior  mortgagee  to  fore- 
close and  to  compel  prior  mortgagee  to  exhaust  other 

mortgage 691 

receiver  allowed  over,  on  death  of  one  trustee  and  refusal  of 

another  to  act 694 

RENT  CHARGE, 

receivers  allowed  in  aid  of 585 

REPAIRS, 

by  receiver,  rule  as  to 180,  633 

REPLEVIN, 

by  receiver,  will  not  lie  when  property  seized  under  para- 
mount lien 1^6 

against  receiver,  enjoined  when  brought  without  leave       .     .     256 

RIGHTS  OF  ACTION,    (See  Suits.) 

receiver  succeeds  to  those  of  original  party 201 

not  changed  by  appointment  of  receiver 204,  318 

of  receiver,  when  determined  by  statute 211 

limited  to  state  where  appointed 239 

of  receiver  of  corporation 313-342 

over  national  bank 360 

in  creditors'  suits 453-471 

over  partnerships 539 

RINGS, 

receiver  appointed  over 432 

s. 

SALARY,    (See  Compensation  of  Receiver.) 

of  public  officer,  receiver  refused 22 

receiver  appointed  without,  security  dispensed  with       .     .     .     118 
of  corporate  officers,  allowed  by  receiver  pro  rata     ....     336 
49 

/ 


7  iO  INDEX. 

SALE,                                                                                                                        Section 
application  of  proceeds  should  not  be  included  in  order  of  ap- 
pointment        100 

set  aside  for  undue  haste 112 

by  sheriff,  when  purchaser  not  in  contempt  for  refusing  to  sur- 
render possession  to  receiver 168 

by  receivers 191-199 

set  aside  for  fraud 191 

for  inadequate  price 191 

does  not  divest  existing  liens 191 

court  vested  with  power  to  sell  when  necessary  ....  192 

sale  of  steamboat 192 

receiver  not  allowed  to  purchase  for  his  own  benefit     .     .  193 

the  rule  independent  of  question  of  fraud 194 

receiver  can  derive  no  benefit  from  foreclosure  sale  .     .     .  194 

nor  from  judicial  sale 194 

when  sale  set  aside  because  of  purchase  by  receiver      .     .  194 

purchase  of  annuity  by  receiver  set  aside 194 

order  for,  can  not  be  assailed  in  collateral  action      .     .     .  196 

fraudulent  action  to  set  aside 196 

to  meet  taxes,  evidence  should  be  clear 197 

of  personal  property,  discretion  as  to  sale  by  bulk  or  in 

parcels 198 

when  set  aside  for  undue  haste 1£8 

of  real  estate,  power  to  give  deed  implied 199 

confirmation  of  conveyance  by  the  court       .     .     .     .  199 

subject  to  incumbrances  and  liens 199  a 

title  of  third  person  not  divested  by 199  a 

of  real  estate  of  partnership 199  a 

subject  to  dower  interest 199  a 

caveat  emptor 199  b 

of  corporate  property,  does  not  need  corporate  seal  .     .     .  388 
not  set  aside  because  applied  for  by  creditor  who  was 

also  judge 338 

by  sheriff,  when  subject  to  receiver's  sale 423 

when  prior  to  receiver's  sale 424 

when  receiver  directed  to  stay 429 

by  receiver,  not  ordered  pending  appeal  as  to  jurisdiction  .     .  543 

SAVINGS  BANK.    (See  Bank.) 

SECRETS, 

concerning  manufacture,  not  disclosed  to  receiver     ....  36 

SECURITY,    (See  Bond,  Recognizance,  Sureties.) 

usually  required  of  receiver  in  advance 118 

of  receiver  alone,  when  allowed 119 

may  be  dispensed  with  by  court 120 


INDEX. 


7T1 


SECURITY  —  Continued,  Sect*  « 

dispensed  with  when  same  receiver  extended  to  different  ered 


iters'  suits 


120 


failure  to  give,  receiver  acquires  no  title 121 

omission  to  require  in  final  decree,  effect  of 122 

additional,  required  when  same  receiver  extended  over  real  es- 


tate 


123 


assignment  of  mortgage  as,  held  good 125 

held  by  creditor  of  deceased,  receiver  not  entitled  to       .     .     .     157 
when  defendant  allowed  to  give,  in  lieu  of  receiver  and  injunc- 
tion       4T8 

SELECTION, 

of  receiver 63-81 

importance  attached  to 63 

reference  to  master  under  English  practice 63 

same  under  New  York  chancery  practice 63 

by  master,  courts  averse  to  interfering  with 64 

grounds  of  interference 64 

by  court  below,  rests  in  judicial  discretion 65 

rarely  interfered  with  by  appellate  court        ....  65 

grounds  of  interference  with 65 

may  be  interfered  with  to  prevent  injury  and  expense  66 

effect  of  relationship " 67 

interest  with  defendant 68 

solicitor  eligible 68 

person  unfamiliar  with  the  property  not  eligible       ...  68 

distant  residence  considered  as  an  objection 69 

solicitor,  under  commission  of  lunacy,  ineligible      ...  70 

in  the  cause,  ineligible 70 

master  in  chancery  ineligible 70 

barrister  eligible 70 

member  of  parliament 70 

peer  ineligible 70 

party  to  the  cause 70 

clerk  of  court  not  necessarily  receiver 71 

clerk  and  master 71 

of  receiver  over  corporation,  delicacy  of 72 

officer  ineligible 72 

eligible  by  statute 72 

another  corporation  eligible 73 

stockholder  and  director  ineligible       .     .     .     <      .     •  80 

of  trustees,  generally  ineligible 74 

when  trustee  and  executor  eligible 74 

next  friend  of  infant  ineligible .75 

mortgagee  and  trustee  eligible 76 


772  INDEX. 

SELECTION  —  Con  fin  ued.  Secttom 

in  partnership  cases,  administrator  of  deceased  partner  eligible  78 

partner  eligible 540 

nomination  in  the  bill 79 

nomination  by  consent  of  parties 79 

mortgagee  of  West  India  estates  eligible  ......  81 

SEQUESTRATION, 

receivership  considered  as  a 5 

of  effects  of  corporation,  not  done  under  general  equity  powers  288 

under  statute,  rights  of  creditors 297 

right  of  judgment  creditors  to 298 

SET-OFF, 

receiver  not  allowed  to  set  off  personal  claim 178 

to  suit  on  note  by  receiver  of  bank 247 

to  suit  by  receiver  of  insurance  company  on  premium  note     .  247 

in  actions  by  receivers  of  insolvent  corporations 248 

accruing  after  receivers  appointment,  not  allowed     ....  249 
not  allowed  in  suit  by  receivers  of  corporation  to  recover  illegal 

dividends 250 

counter-claim  not  allowed  for  amount  illegally  paid  for  notes  .  25 1 

for  rent  due  from  firm,  not  allowed  in  suit  by  receiver  of  firm  253 

when  allowed  to  suits  by  receivers  of  corporations     ....  333 

not  allowed  to  suit  by  receiver  to  recover  illegal  dividends  .     .  333 

defendant  can  not  set  off  judgment  against  receiver  ....  464 

SHAREHOLDERS,    (See  Corporations.) 

misconduct  of,  as  ground  for  receiver 293 

receivers  for  protection  of,  cautiously  granted 294 

not  entitled  to  relief  after  parting  with  interest 294 

acquiescence  or  laches  of,  a  bar  to  receiver 295 

when  refused  receiver  as  to  new  issue  of  stock 29G 

of  foreign  corporation,  when  allowed  receiver  in  New  York    .  306 

suit  against,  for  subscription,  not  barred  by  appointing  receiver  309 

individual  liability 317  a 

may  be  maintained  by  receiver  of  corporation      ....  324 

defenses  to  such  actions 324  a 

will  not  be  enjoined ' .  325 

fraud  no  defense  to,  when  all  parties  participated     .     .     .  325 
when  estopped  from  questioning  receiver's  appointment  or 

order  of  sale • 356 

of  national  bank,  receiver  may  enforce  liability  of     .     .     .     .  360  a 

may  have  receiver  over  railroad,  on  bill  to  set  aside  void  lease  366 

SHERIFF, 

receiver  compared  with 2 

relative  title  and  possession  as  between  receiver  and       .     .  136,  13fi 


INDEX.  773 

SHERIFF  —  Con  t  inued.  Section 

not  allowed  to  enjoin  receiver  from  suing  for  unauthorized 

levy 141 

when  levy  and  sale  of  property  in  receiver's  possession  not  a 

contempt  of  court        171 

receiver  may  move  for  judgment  against,  for  money  collected  228 

sale  by,  when  purchaser  at  receiver's  sale  takes  priority       .     .  423 

when  purchaser  takes  priority  over  receiver's  sale    .     .     .  424 

when  purchaser  granted  receiver  and  injunction      .     .     .  613 

levy  by,  when  receiver's  title  subject  to 440 

when  a  contempt  of  court 443 

when  receiver  can  not  recover  value  of  property      .     .     .  469 
SLAVES, 

in  receiver's  possession,  defendant  not  responsible  for     .     .     .  160 
SOLDIERS, 

when  receiver  refused  over  mortgaged  property  of    ...     .  653 
SOLICITOR, 

eligible  as  receiver 68 

under  commission  of  lunacy,  ineligible 70 

in  the  cause,  ineligible 70 

payment  to,  by  surety,  when  insufficient 132 

assuming  to  act  as  receiver,  liable  for  loss  in  collection  of  rents  284 
SPECIFIC  PERFORMANCE, 

vendor  allowed  receiver  on  bill  for 609 

vendee  allowed  receiver  on  bill  for 610 

STATUTE   OF  LIMITATIONS, 

as  against  receiver 126  a 

operation  of,  not  prevented  by  receivership      .     .     .      135,  184,  556 

payment  by  receiver  can  not  take  case  out  of 184 

effect  of  appointment  to  prevent  statute  from  running  in  favor 

of  stranger 184 

STATUTES, 

enlarging  jurisdiction  of  equity  over  corporations      .     .     .  987,  288 

construction  of 289 

STEAMBOAT, 

sale  of,  by  receiver 192 

when  may  be  operated  by  receiver 481 

STOCKHOLDER.    (See  Corporations,  Shareholders.) 

STRANGER, 

not  allowed  a  receiver 12 

can  not  nominate  receiver 12 

receiver  not  appointed  for  benefit  of 18 

may  apply  to  court  pro  interesse  suo 13 

can  not  object  to  receiver  employing  counsel  of  the  parties     .  217 


774-  INDEX. 

SUBSCRIPTIONS,  Section 

to  fund,  receiver  granted      .      .     .     .< 35 

to  capital  stock,  must  be  enforced  by  receiver  according  to  exist- 
ing remedies 207 

of  insurance  company,  receiver  may  recover 212 

unpaid,  receiver's  right  of  action  to  enforce 224 

action  against  shareholder  for,  not  barred  by  appointing 

receiver 309 

may  be  enforced  by  receiver  of  corporation 324 

shareholder  not  entitled  to  injunction  against      ....  323 

fraud  no  defense  when  all  parties  participated    ....  325 

by  receiver  of  railway,  must  be  by  action  at  law     .     .     .  394 

SUCCESSOR, 

to  receiver,  suits  to  be  continued  by 213 

SUIT, 

must  be  pending  to  warrant  receiver 17 

by  receiver,  failure  to  execute  bond  ground  of  nonsuit  .     .     .  121 

on  receiver's  bond,  when  right  of  action  accrues 129 

against  receiver,  leave  of  court  necessary 139 

may  be  enjoined  for  want  of  leave 140 

by  receivers,  principles  governing 200-230 

in  some  states  regulated  by  statute 200 

regulated  by  court 200 

receiver  succeeds  to  rights  of  action  of  original  party  .     .  201 

what  receiver  must  allege  and  show 201 

can  not  be  maintained  on  obligation  paid  to  obligee      .     .  201 

courts  exercise  strict  control  as  to  bringing 202 

if  unauthorized,  receiver  may  be  directed  to  discontinue  .  202 

when  regularity  of  appointment  deemed  conclusive  in       .  203 

rights  of  action  not  changed  by  appointment  of  receiver  .  204 
can  not  be  maintained  when  not  maintainable  by  original 

party 204 

same  defenses  available  as  in  suits  by  original  parties   .     .  205 

on  note  for  subscription  to  capital  stock 205 

judgment  in  action  by,  bar  to  subsequent  action       .     .     .  206 

freedom  of  action  by  receiver  in  management  of  case  .     .  207 
appeal  by  receiver  from  adverse  decision,  not  evidence  of 

bad  faith 207 

receiver  must  pursue  existing  remedies 207 

leave  necessary  before  bringing 208 

the  rule  applied  to  actions  of  ejectment 208 

on  appeal  bond,  when  receiver's  duty  to  sue  without  leave  208 
receiver  must  sue  in  name  of  original  party  in  whose  favor 

action  accrued C09 


INDEX. 


1.71 


SUIT  —  Continued.  Section 

by  receivers,  the  rule  applied  to  receiver  of  corporation      .     .     209 

of  partnership 209 

over  real  estate 209 

contrary  rule  in  some  states,  receiver  allowed  to  sue  in  his 

own  name 210 

when  allowed  in  name  of  receiver  of  partnership     .     .     .     210 

of  bank 210 

to  recover  purchase  price 210 

allowed  in  name  of  receiver  under  statutes 211 

when  receiver's  right  of  action  determined  by  statute  .  .  212 
trover  by  receiver  of  bank  for  conversion  of  bonds       .     .     212 

suits  by  receiver  of  insurance  company 212 

on  death  of  receiver,  successor  substituted 213 

practice  on 213 

on  removal  of  receiver,  terms  imposed  on  successor  .  .  214 
foreclosure  of  mortgage  by  successors  of  original  receivers  215 
employment  of  counsel  by  receivers,  should  not  employ 

counsel  of  parties 216 

limitation  upon  the  rule 217 

receiver  may  maintain  action  of  detinue 2 IS 

judgment  in  favor  of  receiver,  bar  to  subsequent  suit  for 

same  cause  of  action 219 

effect  of  amendment  changing  character  of  plaintiff  from 

administrator  to  receiver 220 

distinction  between  suits  concerning  title,  aud  concerning 

injuries  to  or  possession  of  real  estate 221 

to  set  aside  fraudulent  conveyance  made  to  defeat  decree 

for  alimony 221 

to  recover  usurious  payments 222 

rents,  notice  to  tenant  necessary 223 

balance  of  purchase  money 22:! 

to  enforce  unpaid  subscription 22-4 

when  defendant  can  not  object  to  irregularities  in  appoint- 
ment   22") 

when  right  of  action  relates  back  to  beginning  of  princi- 
pal's title      220 

failure  to  execute  bond,  ground  for  nonsuit 227 

when  receiver  entitled  to  move  for  judgment  against  sheriff 

for  money  collected 228 

liability  of  receiver  for  costs 229 

receiver  may  garnish  plaintiff  in  suit  in  which  he  was  ap- 
pointed     ,  230 

pleadings  and  proofs  in  suits  by  receivers 231-238 

receiver  must  allege  his  authority  in  traversable  terms      .     231 


,  » G  INDEX. 

SUIT — Continued.                                                                                        Section 
pleadings  and  proofs,  stringency  of  former  rule  as  to  particu- 
lars required  to  be  alleged 232 

now  sufficient  to  allege  appointment  in  general  terms  .     .  233 
receiver  should  state  equities  of  judgment  creditors  whom 

he  represents 234 

when  defendant  estopped  from  denying  receiver's  right  to 

sue  in  that  capacity 235 

in  actions  by  receivers  on  premium  notes 236 

of  national  banks 237 

degree  of  proof  required  at  trial            '. 238 

receiver  need  not  produce  transcript  of  all  proceedings  in 

which  he  was  appointed 238 

suits  by  receivers  in  foreign  courts 239-244  a 

receiver  has  no  extraterritorial  powers 239 

rights  of  action  limited  to  his  own  state 239 

illustrations  of  rule  denying  receiver's  right  of  action  in 

another  state 240 

suits  allowed  in  other  state  on  principles  of  comity  .     .     .  241 

tendency  toward  more  liberal  doctrine 241 

receiver  of  corporation  allowed  to  prove  debt  in  bank- 
ruptcy in  another  state 2-!  2 

mortgage  given  to  receivers  of  another  state,  may  be  fore- 
closed in  state  where  premises  are  located 243 

assignment  by  defendant,  right  of  action  under  ....  244 

when  allowed  to  sue  for  property  in  another  state    .     .     .  244 
jurisdiction  of  foreign  court,  when  not  presumed    .     .     .  244  a 

defenses  to  suits  by  receivers 245-253  a 

same  defenses  available  as  if   action  were  brought  by 

original  party 245 

rule  applied  to  action  by  receiver  of  bank  against  depos- 
itor       245 

want  of  consideration  of  note  and  fraud,  when  not  avail- 
able      246 

set-offs,  the  general  rule 247 

what  may  be  set  off  in  suit  on  notes  by  receiver  of  bank  247 

in  suit  by  receiver  on  premium  notes 247 

burden  of  proof 247 

assignment,  effect  of 247 

in  actions  by  receivers  of  insolvent  corporations     .     .  248 
demands  accruing  after  receiver's  appointment  can  not 

be  set  off 249 

counter-claim  allowed  for  services  rendered  receiver  .  249 
not  allowed  in  suit  by  receivers  of  corporation  to  re- 
cover illegal  dividends 250 


INDEX.  (  (  ( 

SUIT  —  Continued.  Sectiov 

defenses  to,  set-offs,  in  suit  to  recover  notes  illegally  trans- 
ferred, counterclaim  not  allowed  for  amount  paid  for 

notes 231 

judgment  against  receiver,  can  not  be  set  off  in  suit  by 

receiver  in  favor  of  creditors 852 

suit  by  receiver  of  partnership  against  purchaser,  set- 
off for  rent  to  firm  not  allowed 253 

notes  not  attached  in  another  state ~o3<t 

suits  against  receivers 254-268 

leave  of  court  necessary  before  bringing 254 

must  be  averred 254 

leave  to  sue  jurisdictional 254  a 

court  may  fix  forum 254  a 

usual  practice  by  petition 254  b 

court  may  grant  leave  to  sue 25  ib 

trial  by  jury 254  b 

court  may  permit  action  against  receiver  for  injuries  sus- 
tained by  his  negligence 255 

suit  against  receiver  of  railway,  no  defense  that  he  is  a 

public  officer 255 

receivers  not  personally  liable 255 

may  be  enjoined  when  brought  without  leave     ....     25(1 

suit  for  trespass  not  enjoined 257 

not  enjoined  because  matters  have  been  passed  upon  in 

other  proceedings 257 

receiver  of  debtor  need  not  be  joined  as  defendant  in  action 

against  debtor 258 

but  must  be  made  party  before  he  can  take  action  .  .  25S 
receivers  of  corporation,  joinder  of  as  defendants  .  .  .  260 
appearance  of  receiver  a  waiver  of  want  of  leave  to  bring 

suit 261 

courts  will  not  enjoin  their  own  receivers 262 

receiver  may  bring  bill  of  interpleader  against  different 

claimants  proceeding  against  him 263 

receivers  not  allowed  to  waive  any  defense 26 4 

right  of  appeal 264 

leave  to  sue  receiver,  what  notice  necessary 265 

to  defend  ejectment  against  receiver 2C><> 

receiver  not  entitled  to  costs  when  he  has  not  ol  itained  leave 

to  defend 2<i7 

dischai'ge  of  receiver  no  bar  to 268 

by  receivers  of  corporations 31 6-333 

against  receiver  of  corporation  to  collect  tax 340 

by  receiver  of  national  bank,  what  must  be  alleged  ....     361 

what  must  be  proven 361 

against  receiver  of  railway,  for  injuries 395 


773  INDEX. 

SUPERSEDEAS,  Section 

effect  of,  on  receiver's  functions 29,  190 

on  receiver's  possession 130 

SUPPLEMENTARY  PROCEEDINGS,    (See  Judgment  Creditors.) 

under  New  York  code,  receivers  in 401 

no  objection  that  property  is  claimed  by  adverse  claimants  413 
not  appointed  to  attack  assignment  which  may  be  set  aside 

by  creditor 414 

assignment  to  receiver  unnecessary 447 

title  vests  in  receiver  on  appointment 447 

rights  of  action  of  receiver 454 

SUPPLIES, 

furnished  railway,  creditors  not  entitled  to  priority  ....     379 

SUPREME  COURTS, 

when  may  appoint  receivers 41 

SUPREME  COURT  OF  JUDICATURE  ACT, 

receivers  under 23 

SURETIES, 

of  receiver,  two  required  under  English  practice 118 

liability  of 127-133 

held  strictly  to 127 

bond  may  be  vacated  as  to  one 127 

practice  on  so  vacating 12? 

death  of  one,  new  one  required 125 

when  liability  becomes  absolute 129 

when  action  can  be  maintained  against 129 

suit  against  on  death  of  receiver 130 

when  concluded  by  order  on  receiver 130  a 

not  liable  for  default  prior  to  bond 130  a 

liability  for  interest 131 

when  relieved  from  paying  interest 131 

liable  to  costs  of  attachment  against  receiver  for  not  ac- 
counting        131 

surety  protected  by  injunction  after  paying  full  amount 

due 131 

payment  by  surety  to  solicitor,  when  not  sufficient  .     .     .     132 
right  of  surety  to  be  reimbursed  out  of  balance  in  receiver's 

hands 133 

when  ordered  to  refund 133 

remedy  in  equity  against 133 

of  clerk  of  court  appointed  receiver 133  a 

liability  of ,  to  creditors  not  named  in  bond 133  a 

arrangement  with,  for  control  of  funds 274 

of  administrator,  refused  receiver 721 

SURVEYOR.    (See  Land  Surveyor.) 


INDEX.  779 

T. 

TAXES,  Section 

when  receiver  refused  over 32 

lien  of,  not  affected  by  appointment  of  receiver 138 

sale  by  receiver  for  payment  of 197 

when  receiver  can  not  enjoin 318 

against  railroad  company  in  hands  of  receiver 370a 

municipal,  receiver  refused  for  collection  of 403  a 

on  mortgaged  property,  non-payment  ground  for  receiver  .     .  07  2 

TENANTS,    (See  Rents.) 

enjoined  from  bringing  trespass  or  replevin  against  receiver 

without  leave  of  court 356 

can  not  enjoin  receiver  from  turning  out  of  possession  .     .     .  596 

compelled  to  attorn  to  receiver 618 

when  receiver  authorized  to  relieve 731 

TENANTS  IN  COMMON, 

of  personalty,  courts  averse  to  appointing  receiver    ....  20 

of  realty,  receivers  as  between 603-608 

courts  averse  to  interference 603 

when  receiver  denied 603 

exclusion  by  co-tenant,  ground  for 604 

insolvency  as  ground  for 604 

may  be  allowed  over  moiety 605 

injunction  allowed 605 

allowed  in  default  of  defendant  giving  security       .     .     .  605 

equitable  tenants  in  common 605 

allowed  in  case  of  colliery 606 

actions  for  partition 607 

notice  to  under  tenants  not  to  pay  rent  to  co-tenants    .     .  608 
TENANT  FOR  LIFE, 

receiver  granted  against 572 

THEATER, 

receiver  not  appointed  to  manage 36 

partnership  in,  when  receiver  appointed 513 

TIME, 

of  appointment,  formerly  after  answer 103 

modern  practice  before  answer 103 

grounds  of  interference  before 10],  105 

modern  English  practice  adopted  in  this  country      .     .     .  105 

strong  ground  required  for  receiver  before  answer  .     .     .  106 

not  dated  back  by  relation ins 

may  be  made  at  final  hearing 10lj 

the  same,  though  bill  does  not  pray  receiver 109 

may  be  made  after  final  decree m> 


7S0  INDEX. 

TITLE,  Section 

not  changed  by  appointment  of  receiver 5 

dispute  as  to,  receiver  reluctantly  allowed 11 

of  receiver  of  state  court,  as  affected  by  subsequent  bank- 
ruptcy         52 

receiver  does  not  acquire  until  bond  executed 121 

vests  back  to  original  order  of  appointment 136 

does  not  take  effect  back  to  beginning  of  action 136 

of  receiver,  not  divested  by  order  of  court  where  he  is  not  a 

party 161 

not  determined  on  proceedings  for  contempt 172 

to  real  estate  of  corporation,  not  divested  by  receiver  pendente 

lite 302 

vests  in  receiver  on  dissolution  of  corporation     ....  303 

of  receiver  in  creditors'  suits 440-432 

subject  to  prior  liens 440 

takes  no  title  to  exempted  property 441 

exemption  extends  to  insurance 442 

effect  of  assignment  as  vesting 443 

what  passes  to  receiver  under  assignment 444 

right  of  action  for  tort  does  not  pass 444 

when  debtors  compelled  to  make  assignment       ....  446 
receiver  acquires  title  to  debtor's  property  under  New 

York  code  by  virtue  of  appointment 447 

superior  to  that  of  judgment  creditor  subsequently  levy- 
bag     448 

when  not  defeated  by  delay  in  taking  possession      .     .     .  448 

choses  in  action  as  between  receiver  and  purchaser       .     .  449 

trust  fund,  when  receiver  not  entitled  to 450 

takes  title  to  estate  by  curtesy 451 

acquires  no  title  when  debtor  dies  before  appointment       .  452 

of  third  parties,  not  determined  on  summary  application    .     .  457 

to  real  property,  not  affected  by  appointment  of  receiver    .     .  556 

receiver  not  allowed  in  contest  concerning 557 

TOLLS, 

of  bridge  company,  judgment  creditor  allowed  receiver  over  .  300 

of  common  carrier,  receiver  over 380 

different  mortgagees  of,  right  to  receiver  as  between       .     .  382,  385 

when  not  allowed  preference 383,  385 

TORT, 

right  of  action  for,  does  not  pass  to  receiver 444 

TRESPASS, 

action  of,  against  receiver,  enjoined  when  brought  without 

leave 256 

when  receiver  liable  in,  for  taking  mortgaged  property  .     .     .  277 


INDEX.  <  $1 

TROVER,  SECT10N 

can  not  be  maintained  by  receiver  of  partnership  in  bis  own 

209 

name 

by  receiver  of  bank,  for  conversion  of  bonds 21;- 

for  promissory  note,  by  receiver  of  corporation 316 

TRUST  DEED, 

securing  railroad  bondholders,   prior    jurisdiction  of  United 

States  courts  maintained °4 

securing  illegal  bank-notes,  receiver  on  bill  to  set  aside  ...     293 

TRUSTEES,    (See  Trusts.) 

ebgibility  of,  as  receivers ^"^ 

generally  ineligible '4 

when  eligible ' 

mortgagee,  also  trustee,  eligible ^ 

in  bankruptcy,  incompatible  with  receiver  of  debtor  ...  7  i 
receiver  may  be  appointed  against,  after  decree  .  .  •  •  •  H° 
beyond  jurisdiction  of  court,  when  receiver  allowed  without 

notice 

in  nature  of  receiver,  can  not  sue  in  his  own  name  ....  209 
under  assignment  for  creditors,  refusal  to  act  ground  for  re- 

.  .     412 

ceiver 

mismanagement  of,  receiver  granted 412 

of  foreign  mining  property,  when  receiver  granted  against      .     503 

of  religious  society,  receiver  refused  over  real  estate  in  posses- 

.         «  563 

sion  ot 

dissensions  among,  ground  for  receiver  to  secure  rents  .  .  .  584 
death  of,  or  refusal  to  act,  ground  for  receiver       .... 


bad  habits  of,  not  alone  sufficient 


095 


action  for  removal  of,  receiver  allowed  pendente  lite      ...  697 

fraudulent  conveyance  by,  receiver  allowed 699 

appointment  of  new,  receiver  ordered  to  surrender  to     .     .     .  704 

pension  held  by,  receiver  appointed 70i) 

TRUST  FUND, 

of  insurance  company,  mismanagement  ground  for  receiver  .  304 

when  receiver  of  debtor  not  entitled  to 450 

TRUSTS, 

„  fiQ°-736 

receivers  m  cases  of " 

principles  governing  the  relief 692-705 

referred  to  general  jurisdiction  of  equity  over  trusts   .  692 

receiver  only  appointed  against  trustee  for  good  cause  693 
death  of  one  trustee  and  refusal  of  another  to  act, 

ground  for 69^ 

bad  habits  of  trustee  not  alone  sufficient C9o 

vested  in  state  officers  by  law,  equity  averse  to  re- 

....  696 

ceiver 


782 


INDEX. 


TRUSTS  —  Continued.  Section 

receivers  in  cases  of,  principles  governing,  receiver  allowed 

pending  action  for  removal  of  trustee 697 

fraud,  misconduct,  breach  of  trust 697 

mingling  trust  funds  with  private  funds,  when  not 

ground  for 698 

granted  on  bill  by  cestui  que  trust  to  set  aside  convey- 
ance by  trustee  for  fraud 699 

when  devisee  allowed  receiver  as  against  husband  of 

deceased  wife 700 

refused  in  case  of  trustee  under  contract  for  public 

works 702 

appointment  of  trustee  as  receiver  not  usually  allowed  703 

when  allowed 703 

receiver  ordered  to  transfer  estate  to  new  trustees 

when  appointed 704 

receiver  allowed  over  pension  paid  by  trustee     .     .     .  705 

receivers  over  executors  and  administrators 706-724 

courts  averse  to  granting 706 

relief  based  on  doctrine  of  quia  timet 706 

not  allowed  on  slight  ground 707 

on  information  and  belief 707 

waste  and  abuse  of  trust  ground  for 708 

allowed  before  answer 708 

poverty  no  ground  for 709 

insolvency  and  misconduct  ground  for 710 

bankruptcy  ground  for 711 

removal  from  state  ground  for 712 

allowed  in  England  though  estate  in  foreign  country    .     .  713 

executors  in  foreign  country 713 

allowed  pending  controversy  concerning  probate      .     .     .  714 

judgment  creditors,  when  allowed  receiver  against  .     .     .  715 

when  denied  receiver 716 

not  allowed  to  interfere  with  administration  .     .     .     .    '.  716 
receiver  over,  in  personal  capacity,  not  entitled  to  rents  in 

representative  capacity         717 

death  and  refusal  to  act,  ground  for 718 

misunderstanding  between,  not  ground  for 718 

allowed  when  plaintiff  equitably  interested  in  realty  with 

deceased 719 

court  will  not  examine  executor's  account  on  application 

for 720 

surety  of  administrator  denied  receiver  against  ....  721 

allowed  against  administrator  in  behalf  of  ward      .     .     .  722 

on  removal  of  receiver  executors  again  ordered  to  act  .     .  723 

appointing  receiver  does  not  remove  executor     ....  724 


INDEX.  VS3 

TRUSTS—  Continued.  Section 

receivers  over  estates  of  infants 725-732 

relief  based  on  doctrine  of  trusts 725 

f        granted  on  mismanagement  of  estate  by  busband  of  ex- 
ecutrix      725 

granted  when  executor  bas  absconded 726 

refusal  of  trustees  to  act,  not  granted  on  refusal  of  one  of 

several 727 

granted  on  refusal  of  one  of  two 727 

granted  over  goods  in  possession  of  mortgagee  ....  728 

eligibility  of  receiver,  next  friend  ineligible 729 

trustee  and  executor  ineligible 72!) 

when  eligible 729 

liability  of  receiver  for  interest  on  funds  of 730 

when  authorized  to  relieve  poor  tenants 731 

not  discharged  on  one  of  two  infants  attaining  majority  .  732 

receivers  over  estates  of  lunatics 733-736 

when  appointed 733 

required  to  surrender  to  administrator 733 

relief  discretionary 734 

refused  in  case  of  rival  claimants 734 

solicitor  ineligible  as 735 

may  be  called  to  account 736 

reference  to  master  to  ascertain  condition  of  estate  .     .     .  736 

TUNNEL, 

receiver  for  management  of,  between  railways 368 

TURNPIKE  COMPANY, 

receiver  over  tolls  of  .... 382 

as  between  different  mortgagees 385 


u. 

UNITED  STATES  COURTS, 

powers  of  compared  with  state  courts 50-62 

retain  jurisdiction  if  first  acquired 50 

jurisdiction  in  bankruptcy,  subordinate  to  prior  receiver  in 

state  courts ....       51 

receiver  of,  when  guilty  of  contempt  in  interfering  with  re- 
ceiver of  state  court 51 

usually  recognize  prior  jurisdiction  of  state  courts    ....       52 
exclusive  jurisdiction  asserted  in  proceedings  against  insolv- 
ent corporation 53 

foreclosure  of  railroad  trust  deed  in,  when  jurisdiction  ex- 
clusive       54 


TS4  INDEX. 

UNITED  STATES  COURTS  —  Continued.  Section 

will  not  entertain  bill  for  account  against  receiver  of  state 

court 55 

conflict  between  United  States  and  state  courts  ground  for  re- 
ceiver    58 

receiver  of,  beyond  control  of  state  court 59 

action  against,  in  state  court GO 

receiver    of  state  court    not  granted    writ    of  assistance 

against Gl 

no  greater  rigbts  of  action  tban  receiver  of  state  courts     .  62 
over  railway,  judgment  against  not  enforcible  by  state 

court 397 

on  creditor's  bill,  can  not  sue  in  another  federal  court  .      .471 
USURY, 

suit  by  receiver  to  recover 222 

receiver  of  corporation  can  not  plead,  when  corporation  could 

not 315 

defense  of,  in  case  of  receiver  in  foreclosure  suit 664 

V. 

VACANCY, 

application  to  supply,  may  be  made  in  chambers 9G 

VENDEE.    (See  Purchaser,  Vendor.) 
VENDOR, 

of  real  estate,  denied  receiver  in  action  to  rescind  contract       .     573 

receivers  as  between  vendors  and  purchasers 609-617 

when  vendor  entitled  to,  on  bill  for  specific  performance  .     609 

when  vendee  entitled  to 610 

when  vendor  entitled  to,  in  suit  to  recover  possession  for 

non-payment 611 

VESSEL, 

lien  on  freight  and  earnings  of,  receiver  to  protect     ....     408 
exclusion  from  profits  in,  ground  for  receiver 528 


w. 

WARD, 

allowed  receiver  against  guardian 722 

WASTE, 

as  ground  for  receiver 4,  9,  1 1 

duty  of  receiver  on  commission  of 634 

injunction  against 634 

by  executor,  ground  for  receiver 708 


INDEX.  785 

WHAKFAGE,                                                                                                         Section 
in  front  of  mills,  receiver  entitled  to 158 

WIDOW.    (See  Dower.) 

WIFE.    (See  Husband.) 

WILL,    (See  Devisee,  Heirs- at-Law.) 

receiver  pending  contest  over 46 

•    action  to  enforce  trusts  of,  receiver  appointed  after  decree  .      .  110 

interest  of  devisee  under,  receiver  can  not  reach  by  motion     .  466 
when  receiver  appointed  over  realty  in  action  to  enforce  trust 

of 569 

litigation  to  revoke  probate  of,  not  ground  for  receiver  .     .     .  701 

WRIT  OF  ASSISTANCE, 

not  granted  to  receiver  of  state  court  against  prior  receiver  of 

United  States  court .       61 

50 


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